Eighteen states reached a settlement with Endo Pharmaceuticals Inc. under which Endo paid $2.3 million to settle allegations it entered into a reverse-payment agreement to obstruct generic competition to Lidoderm, a pain relief patch frequently used to treat shingles. According to the complaint, Endo had an agreement with Watson Laboratories Inc. ensuring Endo would not face generic competition for Lidoderm from Watson-related companies from approximately 2012 to 2014. The complaint alleged that the agreement resulted in consumers paying hundreds of millions of dollars in supra-competitive prices for Lidoderm and its generic equivalents during that time. Under the settlement, Endo will pay the states and promises not to enter into similar reverse-payment agreements in the future. Endo is prohibited from paying or incentivizing a generic-drug maker to delay entry into the drug market or interfering with its development or sale of any drug product.

The states alleged that Endo filed patent infringement suits against Watson after Watson sought FDA approval of a generic version of Lidoderm. Endo then “bought off Watson” in a settlement agreement, the states said. As a result, Watson waited a year to introduce its generic product, and at that time, Endo agreed to refrain from competing with its own authorized generic version of its product for the first seven and a half months of Watson’s generic sales, according to the complaint.