New York:
Generic drug makers Ranbaxy of India and Teva of Israel have agreed to settle allegations they made an illegal pact to restrict competition in New York state, authorities said on Wednesday.
New York state Attorney General Eric Schneiderman said the US units of Ranbaxy Pharmaceuticals and Teva Pharmaceuticals had made a deal to not challenge each other's market positions with respect to dozens of generic drugs they sold in the United States, to protect their sales.
The settlement required the two to end the collusion, commit not to enter into similar agreements in the future, and pay the state $150,000 each.
"Agreements between drug manufacturers to protect each other's market positions violate fundamental principles of antitrust law and can lead to higher drug prices," Schneiderman said.
Schneiderman vowed to "intervene aggressively" to eliminate collusion in the drug industry.
Ranbaxy and Teva, the world's largest generic drug manufacturer, had collaborated to not challenge "first to file"regulatory exclusivities held by the other for "a large number of drugs", Schneiderman said.
"First to file" exclusivity protects a manufacturer seeking to market a generic version of a branded drug prior to the expiration of the branded drug's patents. The protection bars competition from rival generic drug makers for 180 days, effectively allowing the generic to be sold at higher prices.
The two companies sought to extend this exclusivity over several years, according to the settlement document.
The attorney general's office said it had not identified any "real-world" anticompetitive effects caused by the provision, but that nevertheless the provision was unlawful.
Neither Ranbaxy nor Teva admitted or denied the attorney general's findings, the settlement said.
A Teva spokeswoman declined to comment. A request for comment from Ranbaxy, majority-owned by Japan's Daiichi Sankyo, was not immediately answered.
The case stemmed from the looming November 2011 expiration of Pfizer's cholesterol-lowering Lipitor, the world's best-selling prescription drug at the time.
Ahead of that date, Ranbaxy was the "first to file" to sell the generic version, atorvastatin calcium, in the US market, winning the 180-day exclusivity protection.
However, amid questions over whether its India production facilities would gain FDA approval, Ranbaxy negotiated a deal to allow Teva to launch its generic version of Lipitor if Ranbaxy were unable to enter the market. In that deal, the companies would split the profits.
In addition, their agreement said that neither would challenge any of the other's applications to market a generic for any reason for at least two years.
"Although the atorvastatin agreement related to the sale of only one drug, by including the 'no-challenge' commitments as part of that agreement, Ranbaxy and Teva each agreed to shield dozens of their drugs from legal and regulatory challenges by the other," according to the account in the settlement.