While Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) is completing its huge acquisition of Actavis from Allergan, it continues to pay a heavy price for a different acquisition it made five years ago. Under a compromise agreement signed several days ago between Teva and 48 US states, Teva will pay $125 million for damage caused by Cephalon, acquired by Teva in 2011, by delaying the entry into the US market of the generic version of Provigil, a drug for treatment of sleep disturbances.
Cephalon was the manufacturer of the ethical drug, and the US authorities allege that it delayed generic competition through false presentations to the US Patent Office, thereby causing damage to US states and customers. Cephalon asserted that it had not broken the law. The compromise includes a $35 million payment by Teva to consumers who bought the drug.
The current compromise follows a larger sum that Teva had to pay for Cephalon's practices. In 2015, a compromise agreement with the US Federal Trade Commission (FTC) included a $1.2 billion payment by Teva for compensation to wholesalers, pharmacies, and insurance companies who overpaid because generic competition was prevented. Teva acquired Cephalon for $6.5 billion, considered one of Teva's worst acquisitions. Since the acquisition, Teva has had to make accounting write-downs that included a reduced value for Cephalon's drugs and earlier than expected generic competition for other drugs.
Published by Globes [online], Israel business news - www.globes-online.com - on August 7, 2016
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