IPXLE Impax Laboratories (MM)

The Federal Trade Commission filed a lawsuit against Endo International PLC and other drugmakers, alleging Endo paid others to delay releases of generic drugs and insulate its higher-cost branded versions.

The FTC said Endo paid Impax Laboratories Inc. and Watson Laboratories, a subsidiary of Allergan PLC, to delay generic versions for two of its main drugs.

Shares of Endo fell 5% to $27.03 in morning trading. The FTC alleges the violations occurred from 2010 to mid-2014.

Representatives for Endo, Impax and Allergan didn't immediately respond to a request for comment.

The FTC alleges that Endo violated antitrust laws by using "pay-for-delay" settlements with other drugmakers—including for two of its pain drugs, Opana ER and Lidoderm, which together make up nearly one-fourth of the company's branded drug revenue. The FTC says that in 2009, they generated 64% of Endo's revenue.

"Endo knew that generic competition would decimate its sales of the corresponding branded product and that any delay in generic competition would be highly profitable for Endo, but very costly for consumers," the complaint said. "Faced with these threats to its lucrative drug franchises, Endo bought off its potential generic competitors."

The FTC's complaint alleges that Endo paid Impax and Allergan's Watson to reduce competition for its brand-name drugs. It also alleges that Endo partner Teikoku Seiyaku Co. was part of the agreement with Watson.

Branded drugs typically cost more than their chemically-identical generic counterparts and so reap more profit for drugmakers. The original creator of a new drug usually has a period of exclusivity granted by law and when it expires, generic producers can enter the market and drive down prices. The FTC alleges that Endo entered into agreements, worth about $100 million in some cases, with generic drugmakers to delay their entrance into the market.

The FTC agreed to file the lawsuit with three commissioners voting yes and one commissioner voting no. The dissenting commissioner, Maureen K. Ohlhausen, wrote that she agrees with the allegations but she believes the commissioner should work the case through the FTC's administrative system.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

March 31, 2016 11:35 ET (15:35 GMT)

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