FTC’s Drug Settlement a Win for the Lawyers

29 May 2015 | Author: | No comments yet »

In Wake of Teva Deal, FTC Hopes to ‘Send a Strong Signal’ To Pharma.

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. That comes after a $512 million settlement Teva reached with plaintiffs who said they’d been forced to overpay for Provigil as a result, and a second settlement, the value of which is undisclosed. The agreement marks the first time the agency, which has been aggressively policing pay-to-delay settlements between drug makers, has recovered any money on behalf of consumers and others who pay for medicines, such as pharmacy chains and health plans.

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 settlement was reached just as the FTC was about to square off in federal court in Philadelphia against Teva. “It’s just another step in our battle against illegal deals,” FTC chairwoman Edith Ramirez told the media in a briefing. “I expect this will send a very strong signal to any company contemplating doing any type of [such] deal… There’s no question pharmaceutical companies have gotten incredibly creative in the ways they try to get around antitrust laws, so we will continue our fight.” As noted previously, in a pay-to-delay deal, a brand-name drug maker may offer cash or something else of value. 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. For their part, drug makers contend the deals are not only legal, but allow lower-cost generic drugs to reach consumers faster than if patent litigation dragged on for years. 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.

Drugs are protected by patents for 20 years after they are invented, allowing their makers to have a monopoly on their sale and charge whatever price the market will bear during that time. When that patent expires, generic drug companies that specialize in making copy-cat versions of medicines flood in, and competition between them can cause the cost of a medicine to plunge 60% or more in short order. Supreme Court ruled pay-to-delay deals may warrant anti-trust scrutiny, although the justices left it to the lower courts to decide how to sort out some of the criteria for judging anticompetitive behavior. In order to try and protect their business, drug companies will often file multiple patents on single medicine – for treating different diseases, for differing formulations, or for manufacturing processes. The first generic firm to file with the Food and Drug Administration gets to be the only copycat for six months, during which time it will charge a price only slightly less than the branded drug.

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. But for Cephalon, keeping generics off the market was worth more than launching those generics was worth to generic makers including Ranbaxy and Mylan . 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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