Legal Library: Cases and Proceedings

On 2/13/2008, the Commission filed a complaint in federal district court charging Cephalon, Inc. with preventing competition to its branded drug Provigil. The conduct under challenge includes paying four firms to refrain from selling generic versions of Provigil until 2012. Cephalon’s anticompetitive scheme, according to the Commission, denies patients access to lower-cost, generic versions of Provigil and forces consumers and other purchasers to pay hundreds of millions of dollars a year more for Provigil. According to the complaint, Cephalon entered into agreements with four generic drug manufacturers that each planned to sell a generic version of Provigil. Each of these companies had challenged the only remaining patent covering Provigil, one relating to the size of particles used in the product. The complaint charges that Cephalon was able to induce each of the generic companies to abandon its patent challenge and agree to refrain from selling a generic version of Provigil until 2012 by agreeing to pay the companies a total amount in excess of $200 million. In so doing, Cephalon achieved a result that assertion of its patent rights alone could not. In 2008, this case was transferred from the District Court of District of Columbia to the District Court for the Eastern District of Pennsylvania.

Agilent Technologies, Inc. and Varian, Inc., two leading global suppliers of high-performance scientific measurement instruments, have agreed to sell three of their product lines in order to proceed with their proposed $1.5 billion merger. According to the FTC’s complaint, Agilent’s acquisition of Varian would have reduced competition for three types of scientific measurement instruments. To resolve these competitive concerns, the parties have agreed to sell assets related to the manufacture and sale of: 1) Micro Gas Chromatography (Micro GC) instruments; 2) Triple Quadrupole Gas Chromatography-Mass Spectrometry (3Q GC-MS) instruments; and 3) Inductively Coupled Plasma-Mass Spectrometry (ICP-MS) instruments.

Under a settlement with th FTC, Mylan, Inc., and Agila Specialties Global Pte. Ltd and Agila Specialties Pvt. Ltd. (collectively, Agila)  divested 11 generic injectable drugs as a condition of allowing Mylan’s proposed acquisition of Agila from Strides Arcolab Ltd. (Strides). According to the complaint, in each of these 11 markets, Mylan and Agila are two of only a limited number of current or likely future competitors. The number of suppliers in generic pharmaceutical markets matters because prices generally decrease as the number of competing generic suppliers increases. In addition, the injectable generic products of concern are highly susceptible to supply disruptions caused by the inherent difficulties of producing sterile liquid drugs.

On 10/7/2011, the FTC required Teva Pharmaceutical Industries Ltd. to sell the rights and assets related to a generic cancer pain drug and a generic muscle relaxant, as a condition of its proposed $6.8 billion acquisition of rival drug firm Cephalon, Inc. In addition, the proposed settlement requires Teva to enter into a supply agreement that will allow a competing firm to sell a generic version of Cephalon’s wakefulness drug Provigil in 2012. On 7/3/2012, the FTC issued its final order. The final amended FTC order resolving the charges requires Teva to sell the rights and assets related to a generic cancer pain drug and a generic muscle relaxant to Par Pharmaceuticals, Inc. It also requires Teva to enter into a supply agreement that will allow Par to sell a generic version of Cephalon's wakefulness drug Provigil in 2012.