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Pharma Firm Reaches $125M Deal With States

PHILADELPHIA (CN) — Pharmaceutical company Cephalon, accused of keeping competitors' generic versions of Provigil off the shelves by manipulating patent laws, has agreed to pay $125 million back to 48 states and individual consumers.

Cephalon, the maker of the wakefulness drug Provigil, reached the settlement in Philadelphia Federal Court on Aug. 4. The drug is prescribed to treat such conditions as narcolepsy, shift work sleep disorder and excessive daytime sleepiness associated with obstructive sleep apnea.

According to the settlement, Cephalon prevented generic competition from 2006 to 2012 by filing patent infringement lawsuits against potential competitors using newly filed patent applications for changes to the drug, which the states claimed were frivolous.

The states sued in 2006 and a court ruled the new patent was not valid and could not be enforced. But the states later claimed Cephalon paid generic producers to delay production of the cheaper version of the drug until April 2012.

Of the $125 million settlement announced last week, $90 million will go directly to the states involved in the suit and $35 million will go directly to consumers, who were forced to pay higher prices for the drug when generics should have been available. The settlement includes every U.S. state except California and Louisiana.

Attorneys general from around the country have touted the settlement as a win for consumers, including Connecticut Attorney General George Jepsen, who said, "Cephalon's conduct to 'pay-to-delay' generic competition of Provigil, as well as their intentional efforts to defraud the government and consumers is unacceptable."

According to court documents, the U.S. Food and Drug Administration approved Cephalon's active ingredient in Provigil, but as its patent neared expiration in 2001, Cephalon filed a patent for a "new" version of modafinil and was able to keep marketing it exclusively until 2006.

The process is widely known as "evergreening" and is a common practice in the pharmaceutical industry.

According to Consumer Affairs reports, the most recent settlement comes on the heels of several lawsuits brought against Cephalon, including claims that reverse-payment settlements Cephalon entered into with four generic pharmaceutical companies to delay entry of a generic version of the drug into the market were anti-competitive and caused consumers to pay more for the drug.

In 2015, Cephalon, which is now owned by Teva Pharmaceutical Industries, agreed to settle a lawsuit filed by the Federal Trade Commission over the same reverse-payment arrangements made with the generic drugmakers.

Consumer Affairs also reported that in April 2015, Cephalon reached a $512 million settlement with a class of direct purchasers of Provigil in the case King Drug Co. of Florence v. Cephalon.

The most recent settlement is subject to final approval by U.S. District Judge Mitchell S. Goldberg of the Eastern District of Pennsylvania.

Cephalon attorney Robert M. Galvin of Wilmer Cutler Pickering Hale and Dorr in Palo Alto, Calif., did not immediately return an email seeking comment Monday.


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