Generic Drug Loophole Closed!

Generic Drug Loophole Closed!

Generic Drug Loophole Closed!

This morning, the U.S. Federal Trade Commission drew blood: Teva Pharmaceuticals will pay $1.2 billion to reimburse insurers, drug wholesalers, and pharmacies who paid full price for the Provigil, produced by Cephalon, a company Teva bought in 2011, because Cephalon had paid generic drugmakers to delay launching cheaper versions of the blockbuster drug.

That comes after a $512 million settlement Teva reached with plaintiffs who said they’d been forced to overpay for Provigil as a result, and a second settlement, the value of which is undisclosed. Some of that money will be credited to the new amount.* By point of comparison, Teva spent $6.8 billion to purchase Cephalon in 2011, so these settlements effectively increase the cost of the deal by 18%. Petach Tikva, Israel-based Teva, the world’s largest generic drugmaker, will also enter into a legally binding agreement with the U.S. government that will prevent it from making agreements that the FTC deems anticompetitive.

“This is the largest settlement in FTC history for this type of case,” said Edith Ramirez, the FTC’s Chairwoman. “That’s a big sum and I think that will send a very strong signal to any company that is contemplating entering into any type of deal that is anticompetitive.”

The size of the penalty is probably big enough to make drug makers think twice about crafting deals that delay generics. It also should help clarify the convoluted process through which drugs go generic in the U.S. It builds on a Supreme Court ruling against Actavis that opened the door for the FTC to bring such cases.

Read full article on Forbes.com