On May 28, 2015, the Federal Trade Commission (FTC) announced that it reached a settlement with Teva Pharmaceuticals USA over the FTC's 2008 claim that Cephalon, Inc. (which Teva acquired in 2012) entered into reverse payment settlement agreements (also known as pay-for-delay agreements) with four generic drug companies. The settlement requires Teva to both:

Payments made by Teva in settlements for related private litigation will be credited against the amount Teva is required to pay as part of the FTC settlement. In April 2015, Teva agreed to pay $512 million to resolve a class action claim regarding Cephalon's Provigil agreements.

For more information on the FTC's 2008 complaint, see Legal Update, FTC sues Cephalon regarding payments to delay entry of generic drugs.

This is the FTC's first pay-for-delay-related settlement since the US Supreme Court decided FTC v. Actavis, which held that pay-for-delay agreements are subject to antitrust scrutiny under the rule of reason (133 S. Ct. 2223 (2013)).

Under the FTC's order for permanent injunction, Teva is prohibited from entering certain types of reverse payment settlement agreements, including business deals with a competitor:

Teva will be able to enter other settlement agreements where the value of the settlement is unlikely to raise antitrust concerns, including settlements for up to $7 million for saved litigation expenses.

The injunction does not prohibit all forms of reverse payment consideration, including the possibility that a brand name drug manufacturer may grant the generic manufacturer an exclusive license to sell a generic version of the branded drug (also known as a no authorized generic agreement), which some courts have considered a payment under Actavis (see Legal Update, Federal Judge Holds that Pay for Delay Plaintiffs Must Allege Value of Non-cash Reverse Payment Settlements).

The FTC approved the settlement 5-0. The parties were scheduled to begin trial on June 1, 2015.

In April 2015, Judge Mitchell Goldberg of the US District Court for the Eastern District of Pennsylvania held that the FTC Act did not preclude the FTC from seeking monetary relief in the form of disgorgement in its case against Teva. For more information on Judge Goldberg's decision, see Legal Update, EDPA Judge Allows FTC to Seek Disgorgement in Cephalon Pay-for-delay Case.

For more information on the antitrust issues surrounding reverse payment settlement agreements and the status of pay-for-delay litigation, see Practice Notes, Reverse Payment Settlement Agreements and Actavis Case Tracker.