EC fines Teva €60.5m over pay-for-delay deal

The European Commission has fined Teva and its subsidiary Cephalon €60.5 million ($72 million) for agreeing to delay a cheaper generic version of sleep disorder drug modafinil.

In an announcement shared yesterday, November 26, the European Commission said The Teva and Cephalon agreement, which concluded before Teva’s acquisition of Cephalon, violated EU antitrust rules and caused substantial harm to EU patients and healthcare systems.

Executive vice-president Margrethe Vestager said: “It is illegal if pharmaceutical companies agree to buy-off competition and keep cheaper medicines out of the market.

“Even when their agreements are in the form of patent settlements or other seemingly normal commercial transactions. Teva’s and Cephalon's pay-for-delay agreement harmed patients and national health systems, depriving them of more affordable medicines.”

Modafinil, under the brand name Provigil, was Cephalon's best-selling drug for years. The main patents protecting modafinil had expired by 2005.

According to the Commission, the illegal agreement continued until October 2011, when Teva acquired Cephalon.

Teva had its own patents relating to modafinil's production process and was ready to enter the modafinil market with its own generic version. The company even began selling its generic in the UK, before agreeing with Cephalon to stop its market entry and not to challenge Cephalon's patents.

The fine completes the cycle of pay-for-delay investigations launched with the Commission's 2009 sector inquiry into the pharmaceutical sector.

Three other investigations have previously been concluded, with the European Commission issuing fines in cases concerning cardiovascular medicine perindopril, anti-depressant citalopram, and painkiller fentanyl.

A spokesperson for Teva said: “We are currently reviewing the decision but we continue to believe the modafinil patent settlement agreement did not infringe EU competition law in relation to the principles laid out by the Court of Justice of the European union. We are planning to file an appeal before the General Court.”

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