Cephalon, Inc has finalized a previously announced agreement in principle with the US Attorney's Office for the Eastern District of Pennsylvania, the US Department of Justice and various other federal agencies.

The company also reached separate agreements with the Attorneys General of the states of Connecticut and Massachusetts to settle related investigations into the company's sales and promotional practices. The initial investigations began in 2004 and involved three of the company's nine proprietary products in the United States -- Actiq (oral transmucosal fentanyl citrate) [C-II], Provigil (modafinil) tablets [C-IV], and GabitRil (tiagabine hydrochloride). Cephalon fully cooperated with all governmental entities throughout these investigations.

Under the previously disclosed terms of the federal settlement, Cephalon will pay the $425 million reserved in 2007 plus an estimated $12 million in accrued interest expense, plead guilty to a single misdemeanour violation of the US Food, Drug, and Cosmetic Act, and enter into a five-year Corporate Integrity Agreement (CIA) with the Office of the Inspector General of the US Department of Health and Human Services. The guilty plea is subject to approval by the US District Court for the Eastern District of Pennsylvania.

"We are pleased to have these long-standing matters behind us, while preserving our ability to participate in all federal and state health care programmes, thereby maintaining the access of patients in those programs to our medications," stated Jerry Pappert, executive vice president and General Counsel, and a former Attorney General of the Commonwealth of Pennsylvania.

"We believe our existing compliance policies and procedures already address the majority of the requirements outlined in the CIA and that the strong compliance infrastructure now in place has improved the accountability of our employees and the transparency of our actions," said Valli Baldassano, executive vice president and chief compliance officer.

Cephalon also settled its two outstanding state government investigations for a total of $6.85 million. In its settlement with the Connecticut Attorney General and Commissioner of Consumer Protection, Cephalon agreed to a $6.15 million payment, which includes a contribution of $3.8 million to the Connecticut Department of Public Health to fund state cancer initiatives and $200,000 to fund an electronic prescription monitoring program. In addition, the company agreed to a payment of $700,000 to settle an investigation with the Attorney General of the Commonwealth of Massachusetts. Four hundred fifty ($450) thousand dollars of that payment will be used to benefit consumers in Massachusetts and for comprehensive cancer initiatives.

"We are particularly satisfied that the largest share of the payments made to settle the state Attorney General investigations are for programs and initiatives consistent with our commitment to patients," added Cephalon General Counsel Pappert. "These contributions are aligned with our commitment to the oncology community and our emerging oncology business."

Founded in 1987, Cephalon, Inc. is an international biopharmaceutical company dedicated to the discovery, development and commercialization of many unique products in four core therapeutic areas: central nervous system, pain, oncology and addiction.