NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman announced a settlement on Wednesday with two generic pharmaceutical companies to resolve allegations that an agreement between them illegally restricted competition.

Ranbaxy Pharmaceuticals Inc. and Teva Pharmaceuticals USA Inc. allegedly engaged in a collusive agreement in which the companies committed to not challenge certain regulatory exclusivities held by the other. The agreement also allegedly protected each party's market positions with respect to dozens of drugs and reduced the risk that each company would face greater competition for its drugs.

Under the terms of the settlement, Ranbaxy and Teva must terminate the agreement, commit to not enter into similar agreements in the future and make a payment of $300,000 to the state.

"Agreements between drug manufacturers to protect each other's market positions violate fundamental principles of antitrust law and can lead to higher drug prices," Schneiderman said. "Drug companies should be aware that my office will intervene aggressively to root out collusion among industry players and ensure that New Yorkers receive access to critical drugs at fair value."

The settlement is the latest application of a recent legal precedent arising out of actions brought by the Federal Trade Commission and state attorneys general against collusive pay for delay agreements. In the Ranbaxy and Teva agreement, the manufacturers allegedly agreed to refrain from analogous legal challenges to a large number of each others' generic drugs.

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