Ranbaxy Laboratories and Israel— based Teva Pharmaceuticals have agreed to settle allegations levelled by New York state that the two rival generic drug makers made an unlawful agreement to restrict competition.
Ranbaxy, controlled by Japan’s Daiichi Sankyo Co, and Teva’s US unit will pay New York state USD 300,000 and terminate a 2010 agreement not to challenge each other’s rights to sell certain generic drugs exclusively in the US.
Under US law, a generic drug maker is eligible for 180 days of exclusive marketing rights for a new drug it seeks to bring to market by challenging the patents on a branded drug.
However this 180—day exclusivity can be challenged by rivals by approaching the US Food and Drug Administration (USDFA) or in court. Ranbaxy and Teva in the 2010 allegedly agreed to refrain from bringing these types of challenges.
"Agreements between drug manufacturers to protect each other’s market positions violate principles of antitrust law, and can lead to higher drug prices,” New York Attorney General Eric Schneiderman said in a statement.
Such pacts, he said, harm consumers because generic drug prices are lower when multiple manufacturers enter the market.
The two firms neither admitted nor denied the allegations, as part of the settlement. They also agreed to refrain from entering into similar agreements in the future.
Ranbaxy, which has faced USFDA ban on some of its drugs, did not immediately offer any comments.
According to Schneiderman, Ranbaxy was unsure if it will receive USFDA approval in time to begin selling atorvastatin calcium, the generic equivalent of Pfizer’s Lipitor cholesterol drug, by late 2011.
So, Ranbaxy allegedly reached a financial deal that would have allowed Teva to sell generic Lipitor in the event that it couldn’t.
Ranbaxy in fact got USFDA approval and began selling the drug. But the agreement, where the two allegedly agreed not to challenge each other on filings for the exclusive right for six months to sell generic copies of brand name drugs after patents for them expired, remained.
Schneiderman said Ranbaxy—Teva case represented the “pay for delay” agreements between brand name and generic pharmaceutical manufacturers.
Under the so—called “pay—for—delay” deals where brand—name companies pay generic rivals not to sell their versions of a drug at a fraction of the original price.
Ranbaxy shares soar
Shares of Ranbaxy Laboratories on Wednesday settled with a gain of over 3 per cent that pushed up the company’s market capitalisation by Rs 651 crore.
The scrip rallied following reports that the Indian drug major along with Teva Pharmaceuticals has agreed to settle a probe by the New York Attorney General.
The stock opened with modest gains on the BSE and then jumped 4.51 per cent to an intra—day high of Rs 367. At the end of the day it was quoted at Rs 362.15, up 3.13 per cent over its previous close. The company’s m—cap jumped by Rs 651 crore to Rs 15,347 crore.
Under the terms of the settlement, the two generic drug makers will end a 2010 agreement of not challenging each other’s rights to sell certain drugs exclusively in the US.
