UPDATE 1-FTC denies sharing confidential info in Watson spat

* FTC official: Watson never answered questions about deal

* FTC repeats request to subpoena Watson CEO (Adds comment from FTC)

WASHINGTON, July 22 (Reuters) - U.S. antitrust enforcers firmly denied on Thursday sharing any confidential information while investigating a deal between Cephalon and Watson Pharmaceuticals to determine if it broke antitrust law.

The Federal Trade Commission has been accused of overstepping and sharing confidential information in probing allegations Cephalon Inc CEPH.O illegally settled patent disputes with generic drug maker Watson Pharmaceuticals Inc WPI.N and others by paying them not to bring out a cheaper version of its marquee sleep disorder drug, Provigil.

The FTC filed suit against Cephalon in the case in 2008.

As part of the probe, the FTC has subpoenaed Watson CEO Paul Bisaro and repeated a request it be enforced on Thursday. Watson is fighting that subpoena.

A lawyer for Watson, Steven Sunshine, has said in court filings that Markus Meier, assistant director in the FTC’s Health Care Division, telephoned him multiple times to urge that Watson give its exclusivity to generic company Apotex.

Under complicated rules governing the sale of generic drugs, Watson has an exclusive right to produce a generic version of Provigil, also known as modafinil, and retained that right even if it did not market the cheaper version.

Judge Alan Kay sharply criticized the FTC in an order issued this month, saying there was a “strong possibility” that it shared confidential information about Watson with generic rival Apotex.

In court filings on Thursday, the FTC firmly denied violating confidentiality rules.

“FTC staff did not improperly reveal any confidential ... information to Apotex,” it said in one of a series of filings.

Richard Feinstein, director of the FTC’s Bureau of Competition, argued the agency had been trying to determine the nature of the deal between Watson and Cephalon.

“Despite the staff’s repeated efforts, Watson never provided the commission with a straight-up sworn answer to the question,” Feinstein said in a court document.

The five-member commission issued a statement on Thursday backing its staff.

“The subpoena was not issued ‘to pressure Watson to relinquish any exclusivity rights it may have, and thereby attempt to engineer generic entry into the [Provigil] market,’ as Mr. Bisaro argued in his petition to quash the subpoena,” the five members said. “The commission continues to believe that it is entitled to Mr. Bisaro’s testimony in this matter.”

The FTC has been battling what it calls “pay-for-delay” settlements in court, with mixed success. The agency has pushed for legislation to ban the deals but has failed thus far.

According to FTC data, there were 19 pay-to-delay settlements last year. That was up from 16 deals in 2008 and 14 in 2006 and 2007.

The arrival of generic versions of a drug, on average, cuts the price of the medicine roughly in half, according to the FTC.

The case is U.S. District Court for the District of Columbia, the Federal Trade Commission v Paul M. Bisaro. No. 01:10-mc-00289-CKK-AK Reporting by Diane Bartz; editing by Andre Grenon, Gary Hill