Wake up: $125M settlement can open eyes on why drugs costs so much

eyes openA settlement announced Thursday sheds light on why drug prices are so high.

Florida consumers will receive an estimated $2.4 million from a $125 million settlement  between 48 states and a drug maker accused of anti-competitive tactics.

Cephalon Inc., maker of the wakefulness drug Provigil and a unit of Teva Pharmaceuticals, settled charges it protected monopoly profits by delaying generic versions from entering the market for several years.

“These anti-competitive efforts cost Floridians millions of dollars and kept the price of this prescription drug artificially high,” Attorney General Pam Bondi said in a statement. “As a result of our joint efforts, millions of dollars will be will be paid to Florida and consumers.”

As a drug patent neared expiration, Cephalon “intentionally defrauded” the Patent and Trademark Office to secure an additional patent that a court subsequently deemed invalid and unenforceable, government officials said.

“Today’s settlement with the State Attorneys General will resolve Cephalon’s litigation with 48 States relating to an 11-year old settlement between Cephalon and various other companies,” said Teva spokeswoman Denise Bradley. “It will be funded from the proceeds of the settlement entered into in 2015 between Cephalon and the FTC (Federal Trade Commission).”

How did it work? Cephalon delayed generic competition for nearly six years by filing patent infringement lawsuits against all potential generic competitors, government officials said. Generic versions typically cost consumers much less.

Cephalon then settled those patent infringement lawsuits in 2005 and 2006 by paying the generic competitors to delay sale of the generic versions of Provigil until 2012, according to a summary from the Florida Attorney General’s Office.

The states’ settlement remains subject to court approval. It arose from an earlier settlement between Cephalon and the FTC that placed $1.2 billion into an escrow account.

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