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Teva slapped with $512m fine on pay-for-delay deal

Israeli firm pays out to settle claims it hindered use of generic Provigil

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Teva is paying $512m to settle a legal case against its subsidiary Cephalon used pay-for-delay tactics on its wakefulness drug Provigil (modafinil).

The settlement is set to be the largest ever to be paid to drug wholesalers and retailers over allegations of delaying generic medicines.

The settlement still has to be approved by the presiding judge on the case, and this could potentially see the fine lowered - something that has happened in previous pay-for-delay cases.

The lawsuit, originally filed in 2006 by drug wholesalers and retailers that buy directly from drug companies, claimed that Cephalon entered into settlements in patent lawsuits with Teva, Mylan and Ranbaxy Laboratories.

This deal aimed to delay cheaper generic versions of Provigil until 2012 - a deal which the lawsuit said “violated federal antitrust law”.

Mylan and Ranbaxy, which are also defendants in the case, are not part of the settlement.

These types of payments are known as pay-for-delay deals, where pharma firms developing branded drugs make payments to a generic company in return for that firm agreeing to delay its entry into the market.

This means the generic firms are compensated for delaying the sale of their drugs, and pharma companies can keep artificially bringing in revenue from their branded medicines after patents have expired.

This may benefit the firms involved, but can cost patients and healthcare providers billions in extra money it shouldn't need to pay out.

The Federal Trade Commission in the US has in recent years taken a dim view of such arrangements and has taken a proactive approach to stopping such deals. 

The FTC released a report in 2011 saying that these types of deals were costing US patients $3.5bn extra a year in higher drug costs.

The case is King Drug Company of Florence Inc. v Cephalon Inc. et al, U.S. District Court, Eastern District of Pennsylvania, No. 2:06-cv-01797.

Article by
Ben Adams

21st April 2015

From: Sales, Marketing

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