Barr Pharmaceuticals reached the settlement with 34 states, which sued the drugmaker for illegally blocking the sale of a lower-priced generic of the Ovcon contraceptive. The lawsuit, which was filed in November 2005 in Washington, DC, accused Warner Chilcott of paying Barr $20 million so it wouldn’t produce a copycat, according to a statement by Tom Miller, Iowa’s attorney general.

Here’s the background: Barr won FDA approval in 2004 to market a generic Ovcon and planned to sell it for about 30 percent less than Warner Chilcott’s pill, but instead, Barr accepted Warner Chilcott’s offer. According to Miller, Warner Chilcott, which held exclusive rights to produce Ovcon since 2000, feared competition would hurt its profits. “When generic drugs come on the market it almost always results in competition and lower prices,” Miller says. “We allege the agreement destroyed the competition that is crucial for our market-based economy.”

In the settlement, Barr agreed to pay $5.9 million to the states and is prohibited from entering into certain agreements with other companies similar to the deal with Warner-Chilcott. The generic drugmaker, by the way, denied any wrongdoing.