UPDATE 1-FTC sues drug maker Cephalon over generic deals

(adds Cephalon statement, background)

By Diane Bartz

WASHINGTON, Feb 13 (Reuters) - The U.S. Federal Trade Commission filed a lawsuit against Cephalon Inc (CEPH.O) on Wednesday, challenging deals that the company struck with generic drug makers to keep a cheaper copycat version of the sleep disorder drug Provigil off the market.

The FTC asked the U.S. District Court for the District of Columbia to void the agreements, essentially giving the generic drug makers the go-ahead to bring their versions to market.

The agreements, which the FTC said were worth $200 million, were designed to prevent Teva (TEVA.O), Barr BRL.N, Ranbaxy (RANB.BO) and Mylan MYL.N -- all major generic manufacturers -- from selling a generic version of the sleep disorder drug Provigil until 2012, the agency said.

Provigil accounted for $800 million in the company's sales last year, or 46 percent, according to the FTC.

Cephalon said in a statement it believed that the settlements were legal.

"We are disappointed that the FTC has determined to challenge these agreements as we believe they fully comply with both the spirit and letter of the antitrust laws," the company said.

The agency said Cephalon made the $200 million in payments in "purportedly independent business transactions."

"Cephalon prevented competition to Provigil by agreeing to share its future monopoly profits with generic drug makers poised to enter the market," FTC Bureau of Competition Director Jeffrey Schmidt said in statement. "Such conduct is at the core of what the antitrust laws proscribe." (Reporting by Diane Bartz, editing by Leslie Gevirtz)