3 Companies Pay California $70 Million For Delaying Drugs

Don Thompson, Associated Press

Updated 3:55 p.m.

(AP) — Three pharmaceutical companies collectively are agreeing to pay California nearly $70 million to settle allegations that they delayed drugs to keep prices high, California Attorney General Xavier Becerra said Monday.

The bulk of the money will come from Teva Pharmaceutical Industries Ltd. and its affiliates for paying to delay a generic narcolepsy drug, Provigil, from entering the market for nearly six years.

Teva is paying $69 million, which Becerra says is the largest pay-for-delay settlement received by any state.

Such agreements let the developer of brand name drugs keep their monopolies over the drugs after their patents expire, thereby letting them continue to charge consumers higher prices. The drug developer pays the generic manufacturer to keep the cheaper version of the drug from entering the marketplace for an agreed period of time.

Teva said the money will come from a pre-existing fund that was created in 2015 as part of the company's settlement with the U.S. Federal Trade Commission over similar claims, and it will not make any additional payments.

Becerra said such agreements can force consumers and the health care market to pay as much as 90% more than if there were generic alternatives. More than $25 million of the settlement will go to a consumer fund for California residents who purchased Provigil, Nuvigil or Modafinil between 2006 and 2012.

"No one in America should be forced to skip or ration doses of medicine that they need ... and certainly not because a drug company is colluding to keep the price of your drug artificially high even when cheaper options could be available. But that's what's happening," Becerra said.

The second, $760,000 settlement is with Teva, Endo Pharmaceuticals and Teikoku Pharma USA over keeping a genetic alternative to the pain patch Lidoderm from entering the market for nearly two years.

Teva said it is paying $200,000 to cover the state's legal costs after settling similar federal claims earlier this year. Neither Endo nor Teikoku responded to requests for comment.

Both settlements bar the companies from pay-for-delay agreements for several years. Teva is agreeing to not to enter any such agreements for 10 years, while Endo Pharmaceuticals has an eight-year agreement and Teikoku a 20-year injunction.

Teva said the restriction is identical to its federal consent decree.

Becerra also backed pending legislation, AB824 by Democratic Assemblyman Jim Wood of Santa Rosa, that would ban such agreements.

The measure would require pharmaceutical companies to prove that their agreements are not anticompetitive. It passed the Assembly 56-0 in May and is awaiting a vote in the Senate.

Pharmaceutical companies oppose the bill, arguing the Federal Trade Commission already does this monitoring.

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This story has been corrected to say that while there are four settlement agreements, they involve only three companies.