Teva inherited Cephalon's litigation - including FTC pay-to-delay suit

When drugmaker Teva bought Frazer-based Cephalon in 2011, it got brand-name drugs in hopes of further diversifying its business and making it less dependent on revenue from generic drug sales.

But Teva also got Cephalon litigation and investigations, including lawsuits directly impacted by Monday's Supreme Court decision involving so-called pay-to-delay deals or reverse payments.

Last July, Judge Mitchell Goldberg of the federal District Court in Philadelphia put on hold a lawsuit filed by the Federal Trade Commission against Cephalon.

The suit alleged that Cephalon violated antitrust laws by paying off four generic competitors a combined $200 million or so to delay launch of cheaper versions of Cephalon's branded sleep drug Provigil.

The FTC said Provigil had worldwide sales of $1.7 billion in 2007, with $800 million of that coming from U.S. sales.

In its 2008 complaint filed in federal court, the FTC quoted then Cephalon CEO Frank Baldino as saying shortly after the agreements, "We were able to get six more years of patent protection. That's $4 billion in sales that no one expected."

The reason Goldberg put the case on hold was that a few days earlier, on another floor of the federal court house in Philadelphia, the U.S. Court of Appeals for the Third Circuit set in motion the legal trip to Monday's decision by saying that pay-to-delay deals are almost inherently illegal. That differed from three other circuit courts. The Supreme Court often officiates differences of the opinion between circuits.

Now, the FTC can proceed with its cases, including the one against Cephalon, with stronger arguments.

A Teva spokeswoman declined to comment.

A link to Wednesday's Inquirer story on reaction to the opinion is here.