Pay-for-Delay: How Drug Companies keep out Generics

http://cheeptalk.wordpress.com/2009/12/02/pay-for-delay-how-drug-companies-keep-out-generics/

December 2, 2009 | by sandeep


In 2006, the pharma company Cephalon faced entry by generic drug producers. It’s blockbuster drug Provigil was coming to the end of its patent protection. The solution – buy off the competitors for an extra six year window:

Cephalon negotiated separate deals with four generic drug makers — Teva Pharmaceuticals, Ranbaxy Laboratories, Mylan Pharmaceuticals and Barr Laboratories — seeking to develop generic versions of Provigil.

Under those settlement agreements, Cephalon granted the generic drug makers non-exclusive, royalty-bearing rights to market and sell a generic version of Provigil starting in October 2011, or April 2012 if Cephalon obtains a pediatric extension for the drug. Cephalon maintains it has valid patents for Provigil until that time frame.

In documents filed with the Securities and Exchange Commission, Cephalon disclosed it received licenses to certain modafinil-related intellectual property developed by the generic-drug companies. In exchange for the licenses, Cephalon agreed to make payments to Barr, Ranbaxy and Teva “collectively totaling up to $136.00 million over the next several years.”

And this is legal apparently.

(Hat tip: Zachary Roth at Talking Points Memo)