EU fines Teva €60.5m for "pay for delay" pact

Teva  photo: Reuters

The agreement was with Cephalon, which Teva subsequently acquired, concerning sleep disorder treatment modanifil.

The EU announced today that Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) had been fined €60.5 million ($72 million) for an illegal "pay for delay" agreement with Cephalon, before Teva acquired it. The agreement led to a delay in the marketing of a generic version of Cephalon's sleep disorder treatment modanifil, which it sold under the brand name Provigil.

The EU's announcement says that in 2005, Teva, which was ready to launch a generic version of modanifil (and had even started marketing it in the UK) agreed at Cephalon's request to cease marketing, in exchange for certain cash payments and secured a package of commercial side-deals.

The fine is made up of €30 million for Teva and €35 million for Cephalon, but since Teva bought Cephalon in 2011, it will bear the entire sum.

Executive Vice-President Margrethe Vestager, in charge of EU competition policy, said today,"It is illegal if pharmaceutical companies agree to buy-off competition and keep cheaper medicines out of the market. Even when their agreements are in the form of patent settlements or other seemingly normal commercial transactions. Teva's and Cephalon's pay-for-delay agreement harmed patients and national health systems, depriving them of more affordable medicines."

According to the EU statement, "Generic entry brings price competition to markets that can lead to price drops of up to 90%. When Teva entered the UK market for a short period in 2005, it indeed offered a 50% lower price than the price of Cephalon's Provigil."

Teva bought Cephalon for $6.8 million, and since then has paid substantial sums in penalties for actions by Cephalon before the acquisition, among them $1.2 billion to the US Federal Trade Commission because of pay-for-delay agreements.

Published by Globes, Israel business news - en.globes.co.il - on November 26, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Teva  photo: Reuters
Teva photo: Reuters
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