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Teva faces $512m fine in generic Provigil row

Published on 22/04/15 at 12:00pm
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Teva has agreed to a record $512 million settlement in a ‘pay-to-delay’ row over generic versions of its drug Provigil.

The Israeli company, also in the headlines following its $40 billion takeover bid for rival US-based generics rival Mylan, is facing legal action from drug purchasers that lost out while the company paid competitors to delay the launch of their generic versions of Provigil (modafinil).

The lawsuit claims that Cephalon which Teva acquired in 2011, paid more than $300 million to four generic manufacturers who had challenged Cephalon’s patent of the active ingredient modafinil to settle their patent litigation – and agree to delay selling their copycat versions until 2012, a common industry practice known as reverse payment settlements.

But the drug purchasers argue in their suit that were it not for the deals with generic companies, Teva, and its subsidiaries Cephalon and Barr pharmaceuticals – would have faced competition in 2006. The payment is still to be ratified by US District Judge Mitchell Goldberg of the Eastern District of Pennsylvania.

The litigation is set to drag on, however.  It addresses only one segment of a larger lawsuit which involves the US Federal Trade Commission (FTC), a generic rival, and a number of large retailers such as CVS Caremark and Rite Aid who opted out of the class action. In addition generic drugmakers Mylan and Ranbaxy did not settle and remain defendants in the direct purchaser plaintiffs’ case.

Robert Lande who is an expert in antitrust settlements at the University of Baltimore School of Law, says it “should encourage plaintiffs and lead to other large settlements, in pay-for-delay cases.”

Teva spokesperson Denise Bradley confirmed that the company has settled with “a proposed class of direct purchaser plaintiffs in the modafinil antitrust litigation” and that the firm “is pleased with the terms of the settlement,” but refused to comment further on the other ongoing litigation.

David Balto, an antitrust lawyer and a former Federal Trade Commission policy director, says: “That’s a great result for consumers. This was an agreement that was a pretty naked effort to take generic drugs off the market.”

Lilian Anekwe

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