• Three generics makers will pay California almost $70 million collectively to resolve allegations they engaged in pay-for-delay deals with branded drug companies, in turn driving healthcare costs higher for consumers.
• One allegation targeted Israeli drug giant Teva for the monopoly it held over a sleep medicine called Provigil from 2006 to 2012. California Attorney General ?Xavier Becerra argued that Teva was able to do this through anticompetitive practices, namely four agreements where the company paid rivals to delay the launch of their copycat versions of Provigil.
• Becerra lobbed similar accusations at Teva, Endo Pharmaceutical and Japan-based Teikoku for deals surrounding Lidoderm, a medical patch for shingles pain. On Provigil, Teva settled without admitting liability for $69 million, whereas Endo settled the Lidoderm claims with a $760,000 payment. All three drug companies also entered injunction periods ranging eight to 20 years that prohibit them from entering pay-for-delay agreements.

The Federal Trade Commission recently examined 232 settlement agreements between branded and generic drug companies made from October 2015 through September 2016. Of those, 30 deals involved branded firms offering compensation to delay launch of generics, though it was mostly reimbursement of litigation in all but one case.

At least one generics industry trade group cast the findings as evidence there need not be more legislation targeting pay-for-delay deals. States, however, aren’t so convinced.

“We know these [deals] are going on all the time,” Becerra said during a press conference Monday.

Lawmakers have thus introduced to the California Assembly a bill dubbed AB 824, which would make it a violation for reference drug companies to resolve a patent infringement claim on one of their pharmaceutical products by offering something of value in exchange for stalling research, development or sale of the copycat product.

The bill was introduced in February and amended four times by July 11. Becerra said the hope is the bill makes its way through the legislature and to the governor’s desk by the time session lets out in September.

In the meantime, the state has injunctions lasting eight years for Endo, 10 years for Teva and 20 years for Teikoku that, in theory, should prevent the companies from engaging in any sort of pay-for-delay deal.

From the $69 million Teva payment, California is setting up a consumer fund worth more than $25 million for state residents who purchased Provigil (modafinil) ?or related drugs between 2006 and 2012.

“This is a chunk of money, $70 million. But given the amount of money these companies are making by charging us inflated prices, I’d love to tell you it’s just the tip of the iceberg,” Becerra said.

Becerra also hinted that his state will continue to be on the lookout for bad actors.

“We want to see what’s underneath the water,” he said.

“Every pharmaceutical company has a right to get a return on their investment and on the products they produce that in many cases save lives. But you should not be allowed to exploit the desperation and the need of an American in order to make money off these drugs.”

Scrutiny of settlement agreements isn’t the only microscope the generics industry is under. 

In May, attorneys general of 44 states sued 20 generics manufacturers, including Teva, Mylan, Pfizer and Novartis’ Sandoz, for price-fixing practices on 114 drugs over a three-year period. California isn’t a part of that lawsuit.