Endo, Teva join $270M deal to wrap up Lidoderm pay-for-delay lawsuit

Pharma has its latest pay-for-delay settlement. In a pair of deals with two plaintiff classes over generic Lidoderm delays, Endo, Teva and Japanese drugmaker Teikoku Seiyaku have agreed to fork over more than $270 million.  

The plaintiffs disclosed the settlements in filings this week in federal court in San Francisco. Subject to court approval, the deals would resolve years-old litigation alleging Actavis and Endo struck illegal deals to delay cheaper Lidoderm generics as the lidocaine patch's patent protection ran out. The plaintiffs filed their initial lawsuits in November 2013. 

Teikoku licensed and manufactured Lidoderm for Endo to distribute in the U.S., according to a 2007 agreement posted on the SEC website.  

In a deal with the "end-payor" class, defendants will pay $104.75 million, while the defendants will pay $166 million to settle their dispute with direct purchasers. In all, Endo is paying $100 million, while Teva is paying $112 million and Teikoku is shelling out nearly $59 million. 

RELATED: FTC settlement clears Endo from pay-for-delay liability; Watson, Allergan charged 

Endo Chief Legal Officer Matthew J. Maletta said in a statement that the deal "constitutes a significant milestone in Endo’s multiyear turnaround plan." A spokesperson for Teva said the drugmaker "decided it was in the company’s best interest to resolve this matter and to focus on our mission of providing innovative and affordable medicines to people around the globe.” 

The lawsuits say Watson—later Actavis—delayed its generic launch for nine months in exchange for $96 million worth of "free brand Lidoderm" plus a commitment from Endo and Teikoku not to launch their authorized generic for 7.5 months after Watson's product hit the market. Teva picked up the drug, and its attendant legal issues, in an acquisition of Actavis products.
The defendants have maintained they "engaged in no unlawful conduct," according to one of the settlement documents. 

So-called pay-for-delay deals have long irked federal officials and lawmakers, and the FTC has been working to get tough on the arrangements in recent years. In 2013, the Supreme Court ruled that the deals aren't always lawful, undercutting a defense by drugmakers that they are legal. 

RELATED: Endo's off-label Lidoderm mantra, whistleblower says: 'Put the patch where the pain is' 

Even after losing market exclusivity in September 2013, Lidoderm generated more than $600 million in sales for Endo that year. According to the plaintiffs, generics could have launched in December 2012 without the pay-for-delay deal. When the generics eventually hit the market, Endo's Lidoderm sales tanked 87% in the fourth quarter of 2013 compared with the same period in 2012. 

Aside from the class-action lawsuits, the FTC is looking into the setup and last year announced a proposed settlement with Endo, under which the drugmaker agreed to swear off future pay-for-delay deals. At the same time, the feds refiled their suits against Watson and former parent company Allergan.

Aside from the pay-for-delay issue, Endo has already paid $193 million to the feds to resolve claims it marketed the drug for unapproved uses.

Editor's note: This story was updated with a statement from Teva.