48 States to Receive $125M in Settlement over Anti-Sleep Drug

Drug maker Cephalon Inc reached a $125-million settlement with 48 U.S. states after the company was accused of intentionally blocking the release of lower-cost generic alternatives to its blockbuster anti-sleep drug Provigil.

The states sued Teva Pharmaceuticals’ Cephalon for its fraudulent attempts to delay the roll-out of cheaper versions of Provigil. They argued that they had to pay more for the drug in the absence of generic versions.

Provigil helps people remain vigilant during daytime despite lack of sleep due to shift work or medical conditions such as sleep apnea or narcolepsy.

But Cephalon has a long record of patent trolling to maintain its monopoly on the drug. The company was accused of illegally applying for a second patent for Provigil to disperse competition a few more years.

The second patent for the sleep disorder drug was eventually invalidated, but the company maintained monopoly through patent infringement lawsuits based on that patent for six more years. New Jersey’s   Attorney General Christopher S. Porrino, whose state will be awarded $2.7 million from the settlement, said that the deal was a correct solution to a “troubling matter.”

Porrino explained that the anti-competitive practices of Cephalon burdened taxpayers, companies and patients alike since they boosted prices of the medication statewide. Allegedly, the biopharmaceutical company reached an anti-competitive settlement with its rivals between 2005 and 2006.

At the time, it agreed to pay generic companies big money make them postpone the sales of the wakefulness-promoting drug until April 2012. However, states were disgruntled as they lost hundreds of millions of dollars in the meantime while paying for the drug which was pricier than the generic versions.

The 48 states argued that they could have saved the money if they had had access to the cheaper versions by 2006. The lawsuit ended in a settlement in May 2015, after Cephalon agreed to pay the Federal Trade Commission which pursued the lawsuit $1.2 billion for its anti-trust practices. Part of the money were directed to the affected states, which excluded California and Louisiana.

The recent settlement involves an extra $35 million that will go to patients and customers who bought the drug in the 48 states during those six years of delays.

Cephalon which got its name from ‘cephalic’ or ‘brain-related’ was bought by Teva Pharmaceuticals five years ago.

Image Source: Wikimedia