Teva to pay $1.2bn in FTC ‘pay-for-delay’ case

Israel-based pharmaceutical company Teva will have to fork out $1.2 billion after a long-running dispute with the US Federal Trade Commission (FTC) over a controversial ‘pay-for-delay’ case was settled.

The dispute centred on a patent originally owned by drug maker Cephalon related to sleep deprivation drug Provigil (modafinil). Cephalon, formerly based in the US, was bought by Teva in 2012.

According to the FTC, in 2005 generic competition with the drug was imminent, which prompted Cephalon to “buy off the threat” and delay four generic competitors from entering the market with their own versions of the drug.

The generic drug makers were Teva, before it bought Cephalon; Ranbaxy Pharmaceuticals, Mylan Pharmaceuticals; and Barr Laboratories.

In 2008, the FTC launched an investigation that accused Cephalon of unlawfully protecting Provigil through the agreements, all made between 2005 and 2006.

The FTC said Cephalon, whose patent for Provigil had been challenged by the companies in 2005,  later paid them more than $300 million to drop their challenges and forgo marketing their own generic products for six years.

The practice is known as ‘reverse-payment’ or ‘pay for delay’ and the FTC claimed that potential purchasers of the drug, including wholesalers, pharmacies, and insurers, overpaid because of Cephalon’s “illegal conduct”.

In a statement marking the settlement, Edith Ramirez, chair of the FTC, said: “This landmark settlement is an important step in the FTC’s ongoing effort to protect consumers from anti-competitive pay for delay settlements, which burden patients, US businesses, and taxpayers with billions of dollars in higher prescription drug costs.”

The $1.2 billion sum will be paid to those who the FTC claimed were damaged by the agreements

Under the terms of the settlement, Teva is also prohibited from engaging in similar reverse-payment agreements.

Teva had not responded to a request for comment at the time of publication.