U.S. FTC Denies Pressure to Promote Provigil Generic

The U.S. Federal Trade Commission today denied it acted improperly in seeking to promote generic competition to Cephalon Inc.’s sleep-disorder drug Provigil.

“I see no evidence” that agency officials “engaged in improper -- or even out-of-the-ordinary -- conduct with respect to any aspect of the investigation,” Richard Feinstein, director of the FTC’s Bureau of Competition, said in court papers filed today.

U.S. Magistrate Judge Alan Kay in Washington criticized the FTC on July 13 as he ordered it to respond to questions from Watson Pharmaceuticals Inc.. The Corona, California-based maker of generic drugs had accused the FTC of pressuring it to make a deal with Cephalon rival Apotex Inc. to produce a generic form of Provigil.

“The facts before us suggest that the FTC sought to place Watson between a rock and hard place, where the only way Watson could clear its name and escape further FTC scrutiny was to give in to pressure” from the FTC, Kay wrote.

Kay said it was a “strong possibility” that the FTC investigated Watson to stop it from completing an agreement with Cephalon that the FTC believed could delay a generic substitute for Provigil. The FTC may have initiated discussions between Watson and Toronto-based Apotex and supplied confidential company information to Apotex, Kay said.

Outside Counsel

The FTC said today it was Watson’s outside counsel, Steven Sunshine, who agreed Apotex could be contacted and that the agency properly passed along information as part of the investigation.

The FTC today also filed court papers to support its bid to subpoena Watson CEO Paul Bisaro.

Bisaro could reveal if it would have been in the company’s interest to relinquish its rights to making the generic version of Provigil, the FTC said.

In an interview last month, Jerry Pappert, general counsel of Frazer, Pennsylvania-based Cephalon, said the Watson case may show that the FTC lost sight of how to pursue its mandate of ensuring competition.

“These tactics, if they occurred, cross the line into improper and possibly illegal behavior and go well beyond the FTC’s proper role,” he said.

Drugmaker Deals

The case stems from efforts by FTC Chairman Jon Leibowitz to overcome drugmaker deals that the agency says can keep cheaper generic medicines off the market.

The FTC has accused companies of engaging in “pay-for- delay” settlements whereby brand-name companies offer generic manufacturers licensing rights to a product or other compensation in exchange for postponing the marketing of cheaper drugs.

On July 1, the U.S. House of Representatives approved as part of a war-funding bill a provision restricting pharmaceutical companies’ ability to make such deals. The measure was sent to the Senate.

Drugmakers have defended such arrangements, saying they cut litigation costs and in some cases speed the arrival of generic drugs to store shelves.

To contact the reporter on this story: Jeff Bliss in Washington jbliss@bloomberg.net

To contact the editor responsible for this story: Mark Silva in Washington at msilva34@bloomberg.net

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