Teva to Pay $512 Million to Resolve Provigil-Delay Lawsuit

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Teva Pharmaceutical Industries Ltd. will pay $512 million to resolve a class-action lawsuit accusing the drugmaker of conspiring to delay sales of generic versions of its sleep-disorder medicine Provigil, ending almost a decade of litigation.

Cephalon Inc., which Teva acquired in 2011, agreed to settle the antitrust case after a federal judge in Philadelphia refused this year to throw out purchasers’ claims that agreements between drugmakers to postpone release of generic medicines amount to anticompetitive behavior.

The settlement is the largest in a case over attempts to slow the pace of less expensive generic drugs coming to the U.S. market, attorneys for Provigil buyers said in court filings.

In 2013, the U.S. Federal Trade Commission said pay-for-delay accords cost drug purchasers as much as $3.5 billion a year. The pharmaceutical industry counters that the deals are legitimate resolutions of patent-infringement suits.

Denise Bradley, a spokeswoman for Petach Tikva, Israel-based Teva, said Monday’s settlement resulted from patent-infringement suits targeting settlement agreements made in 2005 and 2006 over Provigil.

Patent Accords

The suits targeted agreements about the generic version of the sleep-disorder drug that were designed to “settle patent litigation” over the medicine, Bradley said in an e-mailed statement. The U.S Food and Drug Administration in 1998 approved Provigil to treat narcolepsy and sleep apnea or to help people who work irregular hours get to sleep.

Cephalon reached four patent accords with generic drugmakers so they wouldn’t begin selling Provigil until 2012. Wholesalers who bought the drug, health plans and Apotex Inc., a generic drug company, sued to challenge those agreements.

Companies that bought the drug for resale from June 24, 2006, through Aug. 31, 2012, are eligible to receive settlement payments, according to court filings.

Other drugmakers accused in the suit of seeking to slow the sales of generic drugs, such as Mylan Inc. and Ranbaxy Laboratories Ltd., aren’t part of the accord, according to the filings.

Door Opened

The U.S. Supreme Court opened the door to generic-delay suits in 2013 when it reversed a lower-court ruling that effectively insulated pharmaceutical companies from liability for such agreements.

The Teva settlement is the first to resolve allegations that companies used payments to delay generic drugs from getting on the market, according to Thomas M. Sobol, a Boston-based lawyer who has sued other pharmaceutical companies over the same practice, known as reverse payment.

“Hopefully drug companies will now more often settle patent disputes on the merits of the litigation, rather than by morphing those settlements into lucrative business payoffs that delay generic entry,” Sobol said in an interview.

Astellas Pharma Inc. agreed in January to pay $98 million to resolve suits over an alleged scheme to delay generic versions of its immune-suppressant drug Prograf.

The Louisiana Wholesale Drug Co. and other distributors sued Tokyo-based Astellas for seeking to delay sales of generic Prograf for two years by filing a “sham” petition with the FDA to require safety and efficacy tests, according to court filings.

The case is King Drug Company of Florence Inc. v. Cephalon Inc., 06-cv-01797, U.S. District Court, Eastern District of Pennsylvania (Philadelphia).

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