FTC Could Reclaim Billions Over Cephalon Pay-for-Delay Tactics

The Federal Trade Commission can pursue billions of dollars in repayments from Cephalon over alleged pay-for-delay tactics to stall the marketing of a generic version of Provigil, the brandmaker’s narcolepsy drug. 

Federal Judge Mitchell Goldberg ruled last week that the FTC may seek full disgorgement of Cephalon’s profits between 2007 and 2012 when it used a fraudulent patent to prevent generic versions of the medication from entering the market.

The case dates to 2008, when the FTC started litigation with Cephalon for negotiating reverse-payment settlements with competing generics manufacturers. Cephalon tried to argue that such payments had to exceed a certain threshold to pass as anticompetitive, but Goldberg disagreed in a 2013 ruling, insisting that no such threshold was necessary.

The reverse-payment deals, struck with generics makers Teva, Ranbaxy, Mylan and Barr, led to payouts by Celaphon totaling about $300 million and delayed the development of generic modafinil until April 2012.

The case, FTC v. Cephalon, is being heard in U.S. District Court for the Eastern District of Pennsylvania. A bench trial date has been set for June 1.

Neither the FTC nor Cephalon was available for comment by press time. — Jessica Grinspan