Illinois to get $5 million from settlement over sleep disorder drug

Illinois will get $5 million from drugmaker Cephalon as part of a settlement over allegations that it kept prices high for a sleep disorder drug by thwarting potential competitors.

"Illinois consumers significantly overpaid for a drug they should have been able to purchase at much lower generic prices," said Illinois Attorney General Lisa Madigan in a news release this week.

Illinois was one of 48 states, plus Washington, D.C., to settle with Cephalon, now a subsidiary of Teva Pharmaceutical Industries, for a total of $125 million. Illinois' $5 million portion will go to consumers and state agencies that bought narcolepsy drug Provigil, according to the attorney general's office. The settlement is still subject to court review.

Consumers will receive notice of eligibility.

The states had alleged that Cephalon delayed sales of cheaper, generic versions of Provigil for several years by filing patent infringement lawsuits against potential competitors and then paying those potential competitors settlements to keep their generic versions of the drug off the market. The practice is known as pay-for-delay, or reverse payment.

Cephalon maintains that it didn't do anything illegal but settled with the states to avoid the uncertainties and risks of litigation, according to the settlement agreement.

The $125 million will come out of proceeds of a $1.2 billion settlement reached last year between Cephalon and the Federal Trade Commission over the issue, Teva said.

Teva also did not admit to wrongdoing as part of that settlement. The Israel-based drugmaker completed its acquisition of Cephalon in 2011.