U.S. antitrust authorities have decided not to challenge UCB SA's (UCB.BT) 2007 legal settlement that temporarily kept generic versions of its blockbuster anti-epileptic drug Keppra off the market.

In a letter to UCB lawyers dated March 10, the Federal Trade Commission's Bureau of Competition said it was closing its investigation of whether UCB's settlement with three generics manufacturers amounted to an unfair method of competition in violation of U.S. law.

The FTC sent similar letters to lawyers for the three generics manufacturers that were parties to the settlement: Dr. Reddy's Laboratories Ltd. (RDY) of India, Pittsburgh-based Mylan Inc. (MYL) and Cobalt Laboratories Inc. of Canada. The letters were posted recently on the FTC's Web site.

Keppra generated EUR1.3 billion in global sales for UCB in 2008 (or about $1.7 billion at current exchange rates).

Belgium-based UCB had previously filed patent-infringement lawsuits against the generics companies in federal court to block their plans to launch generic versions of Keppra before its U.S. patent protection expired.

The companies announced an agreement to settle the litigation in October 2007, under which Mylan was permitted to sell generic Keppra beginning in November 2008, ahead of the expiration of UCB's U.S. market exclusivity in January 2009. The remaining terms of the settlement were kept confidential.

Dr. Reddy's began selling generic Keppra in January. Cobalt lists generic Keppra among its products on its Web site. The generic name for Keppra is levetiracetam.

"We are pleased that the FTC decided not to challenge the settlement of the Keppra patent litigation," UCB spokeswoman Andrea Levin said Friday. "We never believed there was a legal or factual basis for such a challenge."

Mylan spokesman Michael Laffin declined to comment. Mylan had previously disclosed in regulatory filings that the FTC notified the company of an investigation into the settlement in November 2007, and that the commission requested information related to the settlement.

Spokespeople for the FTC and the other companies couldn't immediately be reached Friday.

The FTC has tried to crack down on settlement agreements designed to forestall generic competition for brand-name drugs, claiming such deals deprive consumers of hundreds of millions of dollars in savings annually. But the commission's efforts have run into setbacks in the courts.

Last month the FTC filed a lawsuit in U.S. court challenging a settlement between Solvay SA (SVYSY) and generics manufacturers Watson Pharmaceuticals Inc. (WPI) and Par Pharmaceutical Cos. (PRX) that delayed generic competition for testosterone-replacement drug AndroGel.

- Peter Loftus; Dow Jones Newswires; 215-656-8289; peter.loftus@dowjones.com