Drug Company Cephalon Suffers Hefty Blows

April 27th, 2015 by Mike Bothwell

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Federal conspiracy claims and a Federal Trade Commission disgorgement action are a current problem for drugmaker Cephalon.

In April 2015, Cephalon failed to swat down a Federal Trade Commission disgorgement action and federal conspiracy claims. Although the story isn’t new news, the cases dating back to 2008 are still ongoing and new decisions were recently reached.

The FTC took issue with so-called “reverse-payment” settlements Cephalon struck with competing drug makers. Cephalon paid millions trying to stop the competing drug makers from introducing generic versions of their narcolepsy drug Povigil until the year 2012.

Even though U.S. District Judge Mitchell Goldberg found one Cephalon patent invalid in a related 2011 trial, the judge stayed the FTC action pending the U.S. Supreme Court’s guidance regarding reverse-payment settlement claims.

Cephalon is claiming the court should dismiss the FTC’s action since the generic of Provigil, modafinil, entered the market in 2012. Cephalon says injunctive relief is now moot and damages would be inappropriate. They also argue that consumers could obtain duplicative relief in private-plaintiff actions. To this, Goldberg responded “There is no way to predict the outcome of the private plaintiff’s antitrust lawsuits.”

U.S. District Judge Mitchell Goldberg kept the case going last year, saying Cephalon cannot stop the FTC from seeking disgorgement. He also stated “Moreover, the FTC explains that any award obtained pursuant to its proposed disgorgement remedy would be placed in a Consumer Relief Fund and would be used to satisfy any claims in the private plaintiff cases.”

Cephalon’s former employees accuse Cephalon of defrauding the U.S. government by submitting false claims for reimbursement for prescriptions of Provigil and its successor since 2007, Nuvigil, based on illegal off-label promotion. U.S. District Judge Thomas Goldstein is presiding over this False Claims Act complaint against Cephalon.

In 2008, Cephalon pleaded guilty to the misbranding through off-label promotion of Provigil, Actiq and Gabitril.

In April, 2015, Judge Goldstein tossed a few of the claims against Cephalon. However, he allowed many of the big-ticket allegations to advance. Goldstein also advanced the FCA conspiracy claims and claims under the New York False Claims Act based on conduct occurring before April 1, 2007.

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