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Drugmaker to pay $1.2 billion to settle ‘pay for delay’ lawsuit

The Federal Trade Commission announced today it has settled a lawsuit against drug company Cephalon, now owned by Teva Pharmaceutical Industries, Ltd., for $1.2 billion – the largest settlement of its kind to date.

In its lawsuit, detailed in a NewsHour report last year, the FTC accused the company of paying more than $200 million to four generic manufacturers in order to delay the generic version of its wakefulness drug Provigil to market. Opponents like the FTC call such deals, “pay for delay.”

“Today’s landmark settlement is an important step in the FTC’s ongoing effort to protect consumers from anticompetitive 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.

According to the FTC, the settlement money will go toward refunding purchasers like insurers and pharmacies who paid too much for the drug. As part of the settlement, Teva has also agreed not to enter into similar deals in the future.

“We are pleased to have reached an agreement with the government,” a Teva spokeswoman said in a statement. “Teva believes it is the right path for our Company, for the industry and for the patients we serve.”

Drug manufacturers defend the deals, saying they help resolve costly patent litigation and even bring generic drugs to market before the brand-name patents expire.

Last year, PBS NewsHour profiled multiple sclerosis patient Karen Winkler, who has taken Provigil for years to combat extreme fatigue. After Provigil went generic in 2012, Winkler said her out-of-pocket cost for the drug fell from around $700 to $16 for a three-month supply.

Video by PBS NewsHour

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