Teva Pharmaceutical announced on Monday, April 20th has agreed to pay $512 million to settle a class action lawsuit. The suit claimed that Cephalon, which Teva acquired back in 2011, used anticompetitive settlements to delay generic versions of its wakefulness drug Provigil.

Teva Pharmaceutical Industries-Logo

According to a settlement motion filed last Friday, this is the largest settlement ever paid to drug buyers over allegations of intentional planning to delay the introduction of generic drugs.

A spokesperson for Teva, Denise Bradley, said the company was happy with the settlement.

Further details on the Teva generic Provigil settlement

The lawsuit was filed nine years ago by drug wholesalers and retailers, who alleged that Cephalon entered into settlements in patent lawsuits with Teva, Mylan and Ranbaxy Laboratories to prevent generic versions of Provigil from being marketed until 2012.

The plaintiffs also alleged that these settlements violated federal antitrust laws.

Based on a court filing published Friday, Mylan and Ranbaxy, which are co-defendants in this case, have not signed onto the settlement.

Of note, Teva is still facing legal claims from health insurers that bought Provigil from drug distributors.

Teva still faces FTC lawsuit

Analysts also note that the U.S. Federal Trade Commission also filed a lawsuit against Cephalon (but not Mylan and Ranbaxy) over the anticompetitive settlements back in 2008. That case is scheduled to come to trial this summer.

The commission has criticized so-called “pay-for-delay” settlements in which drugmakers pay their generic manufacturers to keep certain high-profit drugs off the generics market for a number of years. The FTC won a major case two years ago when the Supreme Court ruled that such settlements are illegal.

Michael Carrier, a professor at Rutgers Law School knowledgeable about pharmaceutical antitrust law, said the relatively large settlement paid by Tevahinted that the FTC also probably had a strong case against the firm. “It’s a very significant payment which can be viewed as an admission of potential liability,” he said.