Teva to Refund $1.2 Billion to Buyers Who Overpaid for Drug

Settlement ends fight over controversial pay-for-delay agreements.

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Provigil - a drug initially developed by Teva Pharmaceutical Industries' fully owned subsidiary, Cephalon.
Provigil - a drug initially developed by Teva Pharmaceutical Industries' fully owned subsidiary, Cephalon.Credit: Bloomberg

United States antitrust regulators have settled a long-running fight with Cephalon, now owned by Israel’s Teva Pharmaceuticals, over how it resolved a patent infringement lawsuit tied to wakefulness drug Provigil, the Federal Trade Commission said on Thursday.

As part of the settlement, Teva, which bought Cephalon in 2012, agreed to pay $1.2 billion to refund buyers who paid too much for Provigil and to refrain from similar deals in the future, the FTC said.

Some buyers, including wholesalers and insurance companies, have reached court settlements in the dispute, and that money will count toward the $1.2 billion. The FTC will receive some additional money, but not much, according to a source familiar with the agreement who asked not to be named.

Cephalon had been accused by the FTC of illegally protecting its monopoly on Provigil by paying generic drug makers to drop their challenges to Cephalon’s patent.

This is often called a “pay-for-delay” agreement since the brand name drug maker pays a generic maker to delay entering the market.

“Today’s landmark settlement is an important step in the FTC’s ongoing effort to protect consumers from anti-competitive pay for delay settlements, which burden patients, American businesses, and taxpayers with billions of dollars in higher prescription drug costs,” said FTC Chairwoman Edith Ramirez.

Teva said in a statement that the delay agreements that prompted the FTC probe occurred in 2005 and 2006, before it purchased Cephalon.

“We are pleased to have reached an agreement with the government. In relation to the consent decree, Teva believes it is the right path for our company, for the industry and for the patients we serve,” Teva said.

The FTC has fought pay for delay deals for more than 10 years. The agency has pushed for legislation to ban the patent agreements or make it easier for the FTC to challenge them.

This opposition got a boost when the Supreme Court ruled in 2013 that the FTC could pursue pay-for-delay drug cases as potentially illegal.

The decision also likely contributed to Teva’s decision to settle, said Michael Carrier, who teaches antitrust at Rutgers School of Law. “Teva realized there was a significant chance it would have been found guilty of violating the antitrust laws,” he said.

The commission voted 5-0 to approve the settlement.

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