Aug. 21 (Bloomberg) -- CVS Caremark Corp. and Rite Aid Corp. sued Cephalon Inc. and several generic-drug makers for allegedly conspiring to delay competition to its sleep-disorder drug Provigil.

Cephalon signed four patent settlements with generic-drug makers totaling more than $200 million so they wouldn’t begin sales until 2012, the drug-store chains said in the complaint filed yesterday in federal court in Philadelphia. Without the illegal agreements, generic versions of Provigil would have been available as early as January 2006, according to the complaint.

“Cephalon is actively working to destroy the market for generic Provigil and the potential benefits to consumers from generic entry,” lawyers for the chains said in the filing.

The lawsuit is one of several filed against Cephalon complaining about the settlements. The U.S. Federal Trade Commission sued Cephalon last year, claiming the Frazer, Pennsylvania-based company abused the competitive and regulatory process. Banning drugmakers from paying to delay the entry of generic competition may save American consumers $35 billion over 10 years, according to a study the agency released in June.

Sheryl Williams, a Cephalon spokeswoman, said the company hasn’t been served with the lawsuit. The settlements give the generic-drug companies the right to enter the market three years before Cephalon’s patent expires, she said.

‘Pro-Customer’

“That’s pro-customer and pro-competitor,” Williams said in a telephone interview. “We believe in the legality of our settlements.”

Provigil, whose chemical name is modafinil, is approved to help night-shift workers and people with sleep apnea and narcolepsy stay awake. The drug is Cephalon’s top seller, generating $1 billion in gross sales last year.

The patent on modafinil expired in 2007 and another patent on the medicine ends in 2015. The generic-drug companies had challenged the latter patent, which covered the size of particles used in the product.

Last month, a federal judge in Philadelphia restarted proceedings in a consolidated lawsuit against Cephalon and asked all the parties involved to resubmit motions. The judge said the filings in the case had become “unwieldy” and suggested starting from scratch.

Cephalon fell 20 cents to $56.86 at 2:06 p.m. New York time in Nasdaq Stock Market trading. The shares have declined 26 percent this year.

The case is Rite Aid Corp. v. Cephalon Inc., 09-03820, U.S. District Court Eastern District of Pennsylvania (Philadelphia).

To contact the reporters on this story: Sophia Pearson in Wilmington at spearson3@bloomberg.net; Susan Decker in Washington at sdecker1@bloomberg.net.

Last Updated: August 21, 2009 14:18 EDT