Teva's Cephalon enters $125 million settlement in 'pay-for-delay' antitrust case

US State of Georgia Attorney General Sam Olens yesterday announced that Georgia has joined 47 other states in a $125 million settlement with drug manufacturer Cephalon and affiliated companies, now part of Teva Pharmaceutical Industries (NYSE: TEVA).

The settlement ends a multistate investigation into anti-competitive conduct by Cephalon to protect the monopoly profits it earned from its landmark wakefulness drug, Provigil. Cephalon's conduct delayed generic versions of its sleep disorder drug Provigil (modafinil) from entering the market for several years.

As patent and regulatory barriers that prevented generic competition to Provigil neared expiration, Cephalon intentionally defrauded the Patent and Trademark Office to secure an additional patent, which a court subsequently deemed invalid and unenforceable, said AG Olens. Before that court finding, Cephalon was able to delay generic competition for nearly six years by filing patent infringement lawsuits against all potential generic competitors.  Cephalon settled those lawsuits in 2005 and early 2006 by paying the generic competitors to delay sale of their generic versions of Provigil until at least April 2012.  Because of that delayed entry, consumers, states and others paid hundreds of millions more for Provigil than they would have had generic versions of the drug launched by early 2006, as expected.