Drug companies to pay $70 million for delaying cheaper generics, California AG says

A picture taken on June 11, 2013 shows the outside of the factory of Israel's Pharmaceutical Industries Teva in Jerusalem. (Photo By MENAHEM KAHANA/AFP/Getty Images)

Pharmaceutical companies are set to pay nearly $70 million to California over “collusive” deals that kept generic drugs off the market and raised prices, state Attorney General Xavier Becerra announced Monday.

Under such “pay-for-delay” agreements, drugmakers could maintain a monopoly on branded medications after their patents expired, Becerra said. The practices caused consumers “to pay as much as 90% more for drugs shielded from competition,” his office added.

Four settlements were reached with drug companies Teva Pharmaceutical Industries, Endo Pharmaceuticals and Teikoku Pharma over the practices, Becerra said. The agreements will allow some consumers to recover costs related to their drugs.

Teva kept a generic of Provigil, a drug used to treat narcolepsy, from entering the market for almost six years, according to Becerra. Part of the $69 million settlement paid by Teva will be used to create a $25 million consumer fund for California residents who purchased Provigil between 2006 and 2012.

Other settlements reached with Teva, Endo and Teikoku were related to a generic version of Lidoderm that was kept off the market for nearly two years. Lidoderm is a patch used to treat shingles-related pain.

In a statement, Teva said that it will not be making any new payments as part of the settlement and is not agreeing to any new terms. The $69 million will come from a “pre-existing fund that was created, in 2015, when the company settled similar claims brought by the United States Federal Trade Commission (FTC),” Teva said.

The settlement states that Teva must pay California directly if the FTC does not disburse the $69 million.

The California settlements also prohibit Teva and Endo from engaging in further “pay-for-delay” agreements for about a decade, Becerra announced. But in a statement, Teva said that these “injunctive provisions” were identical to those included in a February agreement with the FTC.

Heather Zoumas-Lubeski, executive director of corporate affairs at Endo, called parts of the attorney general’s news release “highly misleading.” She distanced her company from Teva’s multimillion-dollar payment, saying it “has nothing to do with Endo,” and noted that California’s settlement with Endo was reached in June.

Endo agreed to a $760,000 payment as part of that deal, according to Becerra. Endo’s Zoumas-Lubeski said that the terms were not new and that California’s attorney general “entered into a settlement agreement with Endo that provided for injunctive terms consistent with those Endo previously reached with the Federal Trade Commission in January 2017.” Teikoku Pharma did not immediately respond to a request for comment.

Becerra’s office still hailed the settlements, calling the Teva agreement “the largest pay-for-delay settlement received by any state.” The attorney general also called for state legislation that would deter other anti-competitive deals and step up enforcement.

“No one, no one in America, should be forced to skip or ration doses of medicine they need,” he said. “Especially when one of the reasons they can’t afford their medication is because the drug companies are colluding to keep the price artificially high, even when cheaper options could be available.”

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