Ranbaxy settlement with New York state pushes scrip up 3%
20 Feb 2014 10:25 PM GMT
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 $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.
Schneiderman said Ranbaxy-Teva case represented the “pay for delay” agreements between brand name and generic pharmaceutical manufacturers.
Following the news, shares of Ranbaxy Laboratories settled with a gain of over 3 per cent that pushed up the company’s market capitalisation
by Rs 651 crore.
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.
Schneiderman said Ranbaxy-Teva case represented the “pay for delay” agreements between brand name and generic pharmaceutical manufacturers.
Following the news, shares of Ranbaxy Laboratories settled with a gain of over 3 per cent that pushed up the company’s market capitalisation
by Rs 651 crore.
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