The Association for Accessible Medicines is suing California over a new law barring pharmaceutical manufacturers from paying other companies to delay the release of generic drugs into market.

California recently became the first state to ban "pay-for-delay," which critics contend drive up the price of medications by delaying the release of low-cost generic alternatives to name-brand drugs. The Federal Trade Commission is among the critics, arguing on its website that large drug manufacturers stifle competition by using the threat of costly lawsuits to force smaller companies into entering pay-for-delay agreements. http://bit.ly/2XoinCd

In a lawsuit filed in U.S. District Court, AAM contends just the opposite: That pay-for-delay settlements help hold down costs by avoiding costly and time-consuming lawsuits over patent enforcement.

The California law "will have perverse and far-reaching consequences for companies and patients alike," AAM said in court documents. "The presumption of illegality the statute erects—and the massive penalties it imposes—will create significant barriers to entry for generic and biosimilar medicines. The inevitable result will be far fewer such alternatives entering the market before patent expiry, resulting in less competition and higher prices for patients."

AAM represents manufactures of both generic drugs and name-brand medicines. It is asking the federal court to strike down the California law as unconstitutional.