Drugmaker settles for $512 million in suit over delayed generics

Pharmaceutical maker Teva has agreed to a settlement of $512 million in a class action lawsuit over the wakefulness drug Provigil. Drug wholesalers and retailers claimed a generic version of the drug was delayed to market by so-called “pay for delay” agreements between generic makers and the brand drug manufacturer, Cephalon, which Teva bought in 2011.

In a story last summer, PBS NewsHour profiled Karen Winkler, who has multiple sclerosis and has used the Provigil for years to treat her extreme fatigue. In 2005, Winkler’s doctor told her there would be a generic version coming, but it didn’t end up happening for several more years.

In 2006, Cephalon paid $200 million to four different generic manufacturers (including Teva), while agreeing to allow the drug to go generic in 2012. The companies said the deal allowed the generic to come to market before its patent would expire. But critics say the patent was weak, and the drug could have gone generic sooner, had the companies not entered the agreement.

The Federal Trade Commission, has filed a separate lawsuit over Provigil, and other lawsuits over a similar deal with the drug Androgel. It contends these so-called “pay for delay” agreements cost consumers millions of dollars in potential savings.

In a statement to the NewsHour, Teva spokeswoman Denise Bradley said, “Teva is pleased with the terms of the settlement.”

Michael Carrier, a law professor at Rutgers University and expert on antitrust law, told NewsHour the settlement’s size — more than double any other in similar litigation — is significant. “The size of the settlement should put future parties in pay-for-delay cases on notice that the prospect of significant antitrust liability and damages is real,” Carrier said.

The FTC had no comment about the settlement. Its lawsuit is expected to go to trial later this year.