Barr Pharmaceuticals' subsidiary, Barr Laboratories Inc. and Cephalon Inc. have entered into agreements to settle its pending patent infringement disputes in the United States related to Cephalon's Actiq (oral transmucosal fentanyl citrate) [C-II] and Provigil (modafinil) tablets [C-IV] products.

"We are pleased that these agreements allow both parties to resolve pending patent litigation in a way that ensures that Barr can launch generic fentanyl at least 90 days prior to the expiration of any paediatric exclusivity period Cephalon might obtain on Actiq and can launch generic modafinil prior to patent expiry," said Bruce L. Downey, Barr's chairman and chief executive officer.

Barr and Cephalon have entered into a supplemental license agreement related to Actiq, which supplements the license Cephalon previously granted Barr, pursuant to a Federal Trade Commission Order, in mid-2004. The existing license grants Barr a non-exclusive right to sell a generic version of Actiq effective on the earlier of final approval of Cephalon's fentanyl effervescent buccal tablet (FEBT) or February 3, 2007, if Cephalon receives a paediatric extension for Actiq (or September 5, 2006, if Cephalon does not receive the extension). The supplemental license agreement ensures that Barr will be allowed to enter the market no later than December 6, 2006 - two months earlier than the February 6, 2007 date, states the company release.

The supplemental license agreement will go into effect only if the existing license is not otherwise effective on December 6, 2006 and will remain in effect until the existing license becomes effective. During the term of the supplemental license, Barr will have an exclusive royalty-bearing right to market and sell a generic version of Actiq in the United States, and Cephalon will not market or sell, nor shall it license or authorise a third party to market or sell, a generic version of Actiq. The supplemental license agreement will cease to be effective when the existing license agreement becomes effective. After that date, Barr's rights will be controlled by the terms of the existing license.

In connection with the modafinil settlement, Cephalon will grant Barr a non-exclusive royalty-bearing right to market and sell a generic version of Provigil in the United States. Barr's license will become effective in October 2011, unless Cephalon obtains a paediatric extension for Provigil which would permit entry by Barr in April 2012. An earlier entry by Barr may occur based upon the entry of another generic version of Provigil.

Barr and Cephalon also agreed to a series of business arrangements related to modafinil. Specifically, Barr has agreed to grant to Cephalon a non- exclusive license, effective immediately, to certain of its worldwide intellectual property rights related to modafinil in exchange for an upfront payment.

The terms of the agreements are confidential, and are subject to review by the Federal Trade Commission. Financial terms were not disclosed.

The parties will promptly file a dismissal with the United States District Courts for the Districts of New Jersey and Delaware that will conclude pending litigation between the parties regarding Provigil and Actiq, respectively, added the release.

Barr Pharmaceuticals Inc. is a holding company whose principal subsidiaries, Barr Laboratories Inc. and Duramed Pharmaceuticals,Inc., develop, manufacture and market generic and proprietary pharmaceuticals.