US generics case puts Ranbaxy under spotlight

Ranbaxy, India's largest drug maker, figures among the list of four low-cost medicine makers that were allegedly paid $200 million by US drug firm Cephalon to delay the entry of cheap generic medicines into the US market till 2012.

The US anti-competitive practices watch dog Federal Trade Commission (FTC) has sued US drug firm Cephalon for unlawfully blocking sale of cheap generic versions of branded sleep-disorder drug Provigil.

In a release issued on February 13, FTC alleged that Cephalon's 'anti-competitive' scheme denies patients access to lower cost, generic versions of Provigil (modafinil) and forces consumers and other purchasers to pay hundreds of millions of dollars a year more for Provigil.

With US sales of Provigil totalling over $800 million in 2007 and accounting for more than 40 percent of Cephalon's total sales, the prospect of generic competition was a major financial threat to the company, the complaint states.

According to FTC's complaint, filed in the US District Court for the District of Columbia, Cephalon entered into agreements with generic drug manufacturers Teva, Mylan, Barr and Ranbaxy and 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.

"Today's suit against Cephalon seeks to undo a course of anti-competitive conduct which is harming American consumers by depriving them of access to cheaper generic alternatives to an important branded drug," said FTC Bureau of Competition Director Jeffrey Schmidt.

"Cephalon prevented competition to Provigil by agreeing to share its future monopoly profits with generic drug makers poised to enter the market in exchange for delayed generic entry. Such conduct is at the core of what the antitrust laws proscribe."

In filing its complaint, FTC is seeking a permanent injunction against Cephalon that would allow the entry of generic versions of Provigil before 2012.

Further, it is seeking a final court judgment against Cephalon declaring that its course of conduct, including its agreements with Teva, Ranbaxy, Mylan, and Barr, violates Section 5(a) of the FTC Act and barring the company from engaging in similar or related conduct in the future.