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A newly enacted California law that bans so-called pay-to-delay deals between drug makers would reduce competition and consequently lead to higher prices for medicines, according to a lawsuit recently filed by a trade group for generic drug companies.

In these deals, a brand-name drug maker settles a patent lawsuit by paying cash or transferring something else of value to an erstwhile generic rival, which agrees to delay launching a copycat medicine until a specific date in the future. This gives the brand-name drug maker more time to sell its medicine without lower-cost competition.

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