Teva Pharmaceuticals has settled for an agreement with the U.S Federal Trade Commission to pay a large amount of money on behalf on consumers, as a consequence to law violation. Teva settles case with FTC for $1.2 billion, breaking the markets free and allowing for loyal competition and business development in the health care field.
Seemingly, this is the first time the national agency has recovered money for people who pay for medicine and for organizations such as pharmacy chains and health plans. The settlement was reached just before the FTC squared off in federal court in Philadelphia against Teva.
Everything started back in 2005, when Cephalon, a pharmaceutical company now owned by Teva, got lucky and profited from more than $475 million in sales for a prescription drug under the name of Provigil. This particular drug which is designed to treat sleep disorders, generated an almost double profit in sales in 2007, making up about half of Cephalon’s business.
Everything fell apart when the patent for their most profitable drug was faced with its expiring date. Cephalon went farther with choosing to buy off the competition, as federal regulators declared.
Back then, a lawsuit was about to start and continue for an impressive amount of time, as the FTC sued Cephalon for blocking competitors from entering the market and thus limiting consumer choices. The case was about to reach federal court in Philadelphia next week.
However, the landmark deal just took off and reached the gracious tolerance of the FTC, now solving the commission’s charges that Cephalon had blocked no less than four competitors from entering the market, making it hard on consumers to benefit from diversity and freedom of choice.
This is one of the most important proofs that the federal government and FTC are now focused on increasing and motivating competition in the pharma field, this way reducing health care costs. The Cephalon case is a very relevant situation in terms of violation of antitrust laws and the federal organization is turning similar cases into vital priorities.
One of the most unscrupulous tactics Cephalon made use of is an industry practice known as reverse-payment settlement. According to this method, Cephalon agreed to pay generic manufacturers more than $300 million in order to block the sales for copycat versions of Provigil until 2012. Had it not been for this kind of deal with generic companies, involving large sums of money released exclusively for financial interests and public law violations, the drug would have faced competition since 2006.
Thanks to the new judicial settlement, Teva will distribute the 1.2$ billion agreed for toward reimbursement for past buyers of Provigil, including wholesalers, pharmacies and insurers which have all overpaid for the drug, as a consequence to Cephalon’s illegal conduct.
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