Ranbaxy settles claim in US over collusion with Teva

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The US unit of Ranbaxy and US firm Teva Pharmaceutical Industries have settled a claim by the New York attorney general that an unlawful agreement between the two rival generic drugmakers restricted co­m­­petition in the market.

Under the terms of the settlement, the two firms will terminate an agreement signed in 2010 to not challenge each other’s rig­hts to sell certain generic drugs exclusively in the US. The firms will pay the state $300,000 as part of the deal and will not enter similar agreements in future.

A spokesperson for Ranbaxy said the firm was pleased that the matter had been closed. “The attorney general did not find any anti-competitive effects from the agreement in question. Ranbaxy fully cooperated with the investigation, and believes that the agreement was pro-competitive and an important part of making the product readily available to patients and to the US healthcare system,” the spokesperson said.

A statement by NY attorney general Eric Schneiderman said, “Agreements between drug firm to protect each other’s market positions violate fundamental principles of the anti-trust law, and can lead to higher drug prices.”

Reuters quoted Schneiderman as saying that the case represented the latest application of the recent legal precedent arising out of challenges to “pay for delay” agreements between brand names and generic pharmaceutical manufacturers.

In “pay-for-delay” deals, branded drug manufacturers pay their generic rivals not to sell their versions of a drug at a lower cost. The practice caught the attention of drug regulators worldwide, as it raised consumer bills and public healthcare costs.

According to a study by the Federal Trade Commission (FTC), these anti-competitive deals cost consumers and taxpayers $3.5 billion more in drug costs every year.

The Ranbaxy-Teva agreement was related to the planned sale of a generic version of Lipitor used for treating high cholesterol for an exclusive period. The rival drugmakers entered a profit-sharing deal, barring one from challenging the other’s right to sell the generic drug for an exclusive period.

When a generic drug maker seeks to bring a new drug to the US market by challenging the patents of a branded drug manufacturer, it can obtain an exclusive right to sell the generic drug for 180 days without competition from other generic pharma companies.

However, if any other generic drugmaker feels a rival should not have been given the 180-day exclusivity, it can file a challenge with the FDA or in the court.

According to Reuters, the NY attorney general said such agreements harm consumers, as generic drug prices are lower when multiple manufacturers enter the market.

Centrum Broking pharma analyst Ranjit Kapadia said the settlement would not have a big impact on the company’s financials, but would dent its reputation. “Ranbaxy’s reputation has already taken a hit due to a series of recent events. This will now add to it. Financially, the impact will be of only about Rs 1 crore,” Kapadia said.

Sarabjit Kour Nangra, vice-president for pharma research at Angel Broking, said, “The settlement concludes an investigation into the 2010 agreement relating to atorvastatin calcium, the generic version of Pfizer’s Lipitor. The atorvastatin agreement related to the sale of only one drug, but by including ‘no-challenge’ commitments as part of the pact, the two companies shielded dozens of their drugs from legal and regulatory challenges. The settlement is positive for Ranbaxy and the penalty will not impact the company significantly.”

Ranbaxy shares closed at Rs 362.15 apiece on the Bombay Stock Exchange on Wednesday, up 3.13 per cent from previous close.

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