FTC Gets $1.2 Billion From Drug Company Over ‘Pay For Delay’ Patent Scam

29 May 2015 | Author: | No comments yet »

Teva Settles Cephalon Generics Case With F.T.C. for $1.2 Billion.

NEW YORK — The Federal Trade Commission announced Thursday a record settlement of $1.2 billion with Teva Pharmaceutical Industries over charges that a subsidiary, Cephalon, illegally blocked generic competition to its sleep-disorder drug Provigil. As part of the settlement, Teva, which bought Cephalon in 2012, agreed to pay $1.2 billion to refund buyers who paid too much for Provigil and to refrain from similar deals in the future, the FTC said. In the United States alone, its prescription drug Provigil, which treats sleep disorders, generated over $475 million in sales in 2005 and almost double that in 2007.

Some buyers, including wholesalers and insurance companies, have reached court settlements in the dispute, and that money will count toward the $1.2 billion. When the company was faced with an expiring patent and the prospect of generic drug makers selling far cheaper versions of Provigil, it chose to buy off the competition, according to federal regulators. The case is the latest and most significant signal yet, experts say, that the US government, and the FTC in particular, is focused on increasing competition in the pharmaceutical industry to cut health care costs.

In this case, Cephalon paid generic manufacturers more than $300 million to agree not to begin selling their copycat versions until 2012, according to the FTC. The decision also likely contributed to Teva’s decision to settle, said Michael Carrier, who teaches antitrust at Rutgers School of Law. “Teva realized there was a significant chance it would have been found guilty of violating the antitrust laws,” he said. In a separate case that rose to the Supreme Court, the F.T.C. successfully argued that tactics like those employed by Cephalon could violate antitrust laws, and since then, it has made similar cases a priority. “The F.T.C. has been very committed to putting a stop to these kinds of deals,” Edith Ramirez, the commission’s chairwoman, said in a news conference on Thursday. “There’s no question that pharmaceutical companies have gotten very creative in the way they try to get around the antitrust laws. We’re going to continue our fight.” Asked by what date Teva would be required to pay the settlement, Ramirez said the agreement still needed to be approved by the court; a timetable had not been finalized. In 2011, the year before a generic version of Provigil, which is used to treat excessive sleepiness, was available, domestic sales of the drug exceeded $1 billion, the agency said. “We are pleased to have reached an agreement with the government,” Denise Bradley, a spokeswoman for Teva, said in an email on Thursday.

The FTC and consumer groups have criticized reverse-payment deals as anticompetitive because, they say, the deals artificially delay the entry of cheaper generics, which hurts consumers. In addition to the Cephalon case, the commission is litigating two similar reverse-payment settlement cases, one against AbbVie and Teva and the other against Actavis. Gordon noted that Teva, the world’s largest generic drug manufacturer, had a history of challenging other companies’ brand-name patents and being on the other side of the kind of dispute settled on Thursday.

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