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For immediate release – Tuesday, February 26, 2008.
Contact Bob Brammer – 515-281-6699

Barr Pays $5.9 Million to States

States alleged Barr Pharmaceuticals entered an illegal agreement that prevented marketing of a lower-priced generic version of an oral contraceptive.

Thirty-four states, including Iowa, and Barr Pharmaceuticals have resolved a civil law enforcement action by the states that alleged Barr illegally received a payment of $20 million from another company to keep Barr from marketing a lower-priced generic version of “Ovcon,” a prescription oral contraceptive.

Barr is paying $5.9 million to the states, including $107,000 to Iowa, under a proposed Final Order settling the case that was filed late Monday at the U.S. District Court for the District of Columbia in Washington, D.C. Barr also is prohibited from entering into certain types of agreements with other companies and is required to give notice to the states of certain agreements. The payments to the states will be used for antitrust and consumer protection efforts.

“We alleged that Warner Chilcott Corporation paid Barr Pharmaceuticals, Inc., $20 million to keep Barr from marketing a generic version of Ovcon,” Iowa Attorney General Tom Miller said.

“When generic drugs come on the market it almost always results in competition and lower prices,” Miller said. “In this instance, we alleged that Warner Chilcott was the exclusive marketer of Ovcon, and then entered an illegal agreement and paid Barr $20 million so Barr wouldn’t bring a generic version to market.” In the settlement, Barr did not admit any wrongdoing.

The states’ lawsuit, which was filed Nov. 7, 2005, alleged the agreement between the companies was “a naked restraint of trade” with the purpose of stifling competition.

“We allege the agreement destroyed the competition that is crucial for our market-based economy,” Miller said.

Background and details:

The settlement was reached between Barr and 34 states plus the District of Columbia: AK, AZ, AR, CA, CO, DE, DC, FL, ID, IL, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, NV, NY, NC, ND, OH, OK, OR, RI, SC, TN, TX, UT, VT, and VA. The suit was filed in 2005 in conjunction with the Federal Trade Commission.

Barr Pharmaceuticals, Inc., is based in Pomona, NY. Warner Chilcott was based in Rockaway, NJ, at the time of the lawsuit.

The states’ 2005 lawsuit indicated that Ovcon® has been sold in the United States since 1976 as a safe and effective oral contraceptive. Warner Chilcott became the exclusive U.S. distributor of Ovcon beginning in 2000. In 2001, Barr Pharmaceuticals filed an application with the FDA to allow Barr to bring a generic version of Ovcon to market, and, in early 2003, Barr publicly announced that it planned to have the generic on the market by the end of that year.

In response to this threat to its monopoly, the suit said, Warner Chilcott paid Barr $1 million in September 2003 for an option agreement, including terms that, once Barr received FDA approval to market generic Ovcon, Warner Chilcott had 90 days to pay Barr $19 million, and Barr would be prevented from coming to market with generic Ovcon.

On April 23, 2004, the FDA gave Barr approval to market generic Ovcon. On May 6, 2004, Warner Chilcott exercised its option by paying Barr $19 million. As a result of the option agreement, as of the time of the 2005 lawsuit, Warner Chilcott remained the only company in the United States that marketed Ovcon. Barr has since launched a generic version of Ovcon. The states settled their lawsuit against Warner Chilcott in 2007 for $5.5 million.

The suit alleged that Barr intended to offer its generic version of Ovcon for sale at a price approximately 30% less than the price charged by Warner Chilcott, and that Warner Chilcott was aware that its revenues could be decreased substantially if a generic version of Ovcon became available to consumers. The suit alleged: “If Barr had introduced its generic product into the market, the average price paid for Ovcon products would have decreased rapidly and substantially.”

The States’ suit asked the court to find the companies in violation of Federal and State antitrust laws, to prohibit anti-competitive conduct, and to impose civil penalties.

Miller said Iowa and other states have united in several prior cases alleging companies used illegal means to thwart lower-priced generic drugs from coming to market.

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