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Feds score giant settlement with drugmaker

A seven-year legal battle over allegations that the drug company Cephalon Inc. used illegal tactics to stop generic versions of its sleep-disorder drug Provigil from coming to market ended on Thursday with a $1.2 billion settlement with the Federal Trade Commission.

The settlement with Teva Pharmaceutical Industries, Ltd., which took over Cephalon in 2012, provides that the money will be used to compensate consumers, insurance companies, drug stores, and drug wholesalers for having to overpay for the drug. Teva, the world's largest generic drugmaker, also agreed to not use the tactics employed by Cephalon to push up the price of Provigil, the FTC said.

"Today's landmark settlement is an important step in the FTC's ongoing effort to protect consumers from anti-competitive pay-for-delay settlements, which burden patients, American businesses, and taxpayers with billions of dollars in higher prescription drug costs," FTC Chairwoman Edith Ramirez said in a statement. "Requiring wrongdoers to give up their ill-gotten gains is an important deterrent."

Provigil is used to treat those who have sleep apnea, narcolepsy, and shift-work sleep disorder and suffer from excessive sleepiness. Provigil had $1 billion in sales in the U.S. in the year before it went generic.

The FTC sued Cephalon in 2008, accusing the drugmaker of making deals with four generic manufacturers in 2005 and 2006 and essentially gave the company a monopoly on Provigil. That involved lawsuits filed by the company against the generic manufacturers, accusing them of patent infringement, resulting in payments to the companies of $300 million with the understanding they would not market a generic version for six years.

The government's position was bolstered in 2013 when the U.S. Supreme Court confirmed that those types of cases, known as "reverse-payment" patent settlements, can be in violation of federal antitrust laws. This case was scheduled to go to trial next week, but will be closed out if the judge approves the settlement.

"We are pleased to have reached an agreement with the government," Teva said in a statement. "In relation to the consent decree, Teva believes it is the right path for our company, for the industry and for the patients we serve."

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