FTC Sues Cephalon, Inc. for Unlawfully Blocking Sale of Lower-Cost Generic Versions of Branded Drug Until 2012

Complaint Charges Company Paid Four Generic Drug Makers in Order to Protect Monopoly Profits on its Leading Product The Federal Trade Commission today filed a complaint in federal district court against Cephalon, Inc., a pharmaceutical company based in Frazer, Pennsylvania, for a course of anticompetitive conduct that is preventing competition to its branded drug Provigil. The conduct includes paying four firms to refrain from selling generic versions of Provigil until 2012. Cephalon’s anticompetitive scheme, the FTC states, denies patients access to lower-cost, generic versions of Provigil and forces consumers and other purchasers to pay hundreds of millions of dollars a year more for Provigil.

According to the Commission’s complaint, filed in the U.S. District Court for the District of Columbia, Cephalon entered into agreements with four generic drug manufacturers that each planned to sell a generic version of Provigil. Each of these companies had challenged the only remaining patent covering Provigil, one relating to the size of particles used in the product. The complaint charges that Cephalon was able to induce each of the generic companies to abandon its patent challenge and agree to refrain from selling a generic version of Provigil until 2012 by agreeing to pay the companies a total amount in excess of $200 million. In so doing, Cephalon achieved a result that assertion of its patent rights alone could not.

“Today’s suit against Cephalon seeks to undo a course of anticompetitive conduct that is harming American consumers by depriving them of access to lower-cost generic alternatives to an important branded drug,” said FTC Bureau of Competition Director Jeffrey Schmidt. “Cephalon prevented competition to Provigil by agreeing to share its future monopoly profits with generic drug makers poised to enter the market, in exchange for delayed generic entry. Such conduct is at the core of what the antitrust laws proscribe.”