Teva Close to FTC Settlement on Cephalon’s Provigil Valued at Roughly $1 Billion
Teva’s Recent $512 Million Settlement in Private Lawsuit Will Apply Toward FTC Agreement
WASHINGTON— Teva Pharmaceutical Industries Ltd. is close to a settlement valued around $1 billion to resolve government allegations its Cephalon subsidiary paid generic drug makers to delay competing versions of the sleep-disorder drug Provigil, according to people familiar with the matter.
The drug maker’s settlement with the Federal Trade Commission, which could be announced soon, comes ahead of trial proceedings scheduled to begin June 1 in a Philadelphia federal court.
Teva’s price tag for the settlement will include credit from private settlements the company has already agreed to pay in similar Cephalon-related litigation, including a $512 million settlement in April, a person familiar with the agreement said.
The FTC will hold the settlement money in an escrow fund to be distributed to parties that were affected by the alleged conduct, this person said.
The agreement will be a milestone in the FTC’s long-running campaign to stop legal settlements in which brand name drug makers pay generic-drug competitors to drop patent lawsuits that could lead to the earliest possible market entry of lower-cost generic medicines.
The FTC has had mixed success in its enforcement actions, but it won a Supreme Court ruling in 2013 that provided a significant boost to its efforts. The Cephalon case was being watched closely as an early test for how lower courts would apply the Supreme Court’s decision.
The FTC alleged Cephalon paid several generic drug makers, including Teva, collectively more than $200 million to abandon challenges to the patent for Provigil and to refrain from selling generic versions of the drug until 2012.
The agreements were anticompetitive and forced consumers and others to pay hundreds of millions of dollars more annually for the drug than they would have paid if inexpensive generic alternatives were available, the commission alleged.
Cephalon denied the allegations.
Antitrust litigation rarely goes to trial, as defendant companies can face high monetary damages if they lose. The judge overseeing the Cephalon case ruled in April that the FTC could seek disgorgement of Cephalon’s allegedly ill-gotten profits, a dollar figure much larger than what Teva will pay in the settlement.