Cephalon, U.S. states reach $125 million settlement over generic drugs

[August 05, 2016]  By Sarah N. Lynch

WASHINGTON (Reuters) - Cephalon has reached a $125 million settlement with 48 states in connection with its alleged efforts to delay generic versions of its blockbuster sleep disorder drug Provigil from entering the market, New York Attorney General Eric Schneiderman said on Thursday.

The settlement with Cephalon, now owned by Teva Pharmaceuticals, comes a little more than a year after the company struck a $1.2 billion parallel settlement with the Federal Trade Commission.

The FTC accused the company of protecting its monopoly on Provigil by paying generic drug makers to drop their challenges to Cephalon's patent, in what is known as a "pay-for-delay" deal.

A company spokeswoman said Thursday's settlement resolves litigation with the states in connection with "an 11-year-old settlement between Cephalon and various other companies."

"It will be funded from the proceeds of the settlement entered into in 2015 between Cephalon and the FTC," she added.

In a statement, Schneiderman said Cephalon defrauded the Patent and Trademark Office in order to secure an additional patent, which was later invalidated by a court.

At the same time, the company successfully delayed generic competition of the drug by six years through filing patent infringement lawsuits and then settling them by paying competitions to delay selling generic versions of Provigil, Schneiderman said.

"When pharmaceutical companies put profits ahead of people by illegally restricting competition, it harms patients across our state," Schneiderman said.

"This misconduct which drives up the cost of prescription drugs will not be tolerated."

The settlement is still subject to court review.

(Reporting by Sarah N. Lynch; Editing by Paul Simao)

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