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Commission fines pharmaceutical firms Teva and Cephalon for delaying of cheaper generic medicine

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The European Commission has fined the pharmaceutical companies Teva and Cephalon €60.5 million for agreeing to delay for several years the market entry of a cheaper generic version of Cephalon’s drug for sleep disorders, modafinil, after Cephalon’s main patents had expired. The agreement was concluded well before Cephalon became a subsidiary of Teva.

The agreement violated EU antitrust rules and caused substantial harm to EU patients and healthcare systems by keeping prices high for modafinil. Modafinil is a medicine used for the treatment of excessive daytime sleepiness associated in particular with narcolepsy.

Today’s decision concerns a patent settlement agreement whereby Cephalon induced Teva not to enter the market with a cheaper version of modafinil, in exchange for a package of commercial side-deals that were beneficial to Teva and some cash payments.

The Commission investigation has found that for several years, this “pay-for-delay” agreement eliminated Teva as a competitor and allowed Cephalon to continue charging high prices even if the main modafinil patent had long expired. The fines imposed by the Commission on Teva and Cephalon are €30 million and €30.5 million, respectively, amounting in total to €60.5 million.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “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.”

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