July 17, 2017 / 10:15 AM / 2 years ago

EU regulators charge Teva over pay-for-delay drug deal

BRUSSELS (Reuters) - EU antitrust regulators charged Israeli drugmaker Teva (TEVA.TA) (TEVA.N) on Monday with doing an illegal deal with Cephalon to delay selling a cheaper generic version of the latter’s sleep disorder drug, putting it at risk of a fine.

A building belonging to Teva Pharmaceutical Industries, the world's biggest generic drugmaker and Israel's largest company, is seen in Jerusalem February 8, 2017. REUTERS/Ronen Zvulun

The crackdown by the European Commission follows fines against scores of companies including Denmark’s Lundbeck, U.S. giant Johnson & Johnson and France’s Servier in recent years over similar deals.

The EU competition enforcer’s 2009 inquiry into the sector showed that so-called pay-for-delay deals cost European consumers billions of euros.

Teva, the world’s biggest generic drugmaker, reached the deal with Cephalon as part of a settlement to end a lawsuit over alleged infringement of Cephalon’s patents on the blockbuster drug. This involved cash payments from Cephalon, which Teva later acquired in 2011.

The Commission said the deal may have pushed up prices of the drug, modafinil.

“The patent settlement agreement between Cephalon and Teva may have caused substantial harm to EU patients and health service budgets,” the EU competition enforcer said in a statement.

Teva said it strongly disagreed with the Commission’s analysis on such deals.

“We do not believe that Cephalon and Teva entered into any anti-competitive behavior,” the company said.

Teva, which can ask for a closed-door hearing to defend its case, can be fined up to 10 percent of its global turnover if found guilty of breaching EU antitrust rules. The company made $21.9 billion of revenue in 2016.

It was fined 15.6 million euros ($17.9 million) in 2014 for an illegal deal with Servier.

The Commission in May sent a warning shot to the sector by opening an investigation into alleged excessive pricing by South Africa’s Aspen Pharmacare (APNJ.J) for five cancer medicines.

Reporting by Foo Yun Chee; Additional reporting by Ari Rabinovitch in Jerusalem; Editing by Philip Blenkinsop and Mark Potter

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