Alzheimer Drug Maker Sued for Antitrust

Here we go again. Another drug manufacturer has been sued for trying to stifle competition from generic drug makers.

We’ve written about how Abbott Laboratories, Eisai and Pfizer used smarmy, anticompetitive practices to protect the profits for their brand-name drugs. This time, according to a story in the New York Times, the manufacturer is Forest Laboratories (owned by Actavis), and the drug is Namenda, which is prescribed for Alzheimer’s patients. Earlier this year, Forest Labs said it would stop selling the current version of Namenda in favor of Namenda XR, a newer version that’s taken once a day instead of twice, and has extended release properties.

The lawsuit, filed by the New York attorney general, seeks to stop what it says is an antitrust practice of forcing Alzheimer’s patients to switch to the newer, more expensive drug and preventing competition from generic versions.

It’s hardly a coincidence that the older version of Namenda is losing its patent protection just as Forest Labs modifies its drug, claiming that patients prefer the newer version. The lawsuit says the company illegally is trying to extend its patent and prolong its monopoly on the drug.

As The Times reported, “A drug company manipulating vulnerable patients and forcing physicians to alter treatment plans unnecessarily, simply to protect corporate profits, is unethical and illegal,” Attorney General Eric T. Schneiderman said.

As you might expect, the company’s weak response was to claim that the once-a-day drug had “significant advantages” for patients and their caregivers.

“Significance” is precisely what the lawsuit hinges on; the complaint is that switching drugs to the newer version does not offer a “significant” benefit. It says that Forest Labs is afraid not enough patients will switch to the new drug voluntarily, so it’s eliminating the option in order to maintain profits.

The tactic, according to The Times, is called “product hopping,” and it’s only one of several ways brand-name drug manufacturers try to hold off generic competition. “Several antitrust cases have been brought against drug companies for product hopping,” the paper reported, “though mainly by pharmacies and health plans rather than government regulators.”

There are many reasons why providers prescribe generic drugs, and why patients take them (see our recent newsletter, “Becoming a Smarter Buyer of Prescription Drugs.”) Chief among them is lower cost.

But as The Times pointed out, state laws allow or require pharmacists to substitute a generic when a doctor prescribes a brand-name drug, and generics compose a much larger percentage of the prescription market than brand-name drugs. But if a brand-name drug is even slightly different – say, a different dosage or how it’s delivered – pharmacists may not substitute a generic without permission. So patent-holding manufacturers seek ways to tweak their drugs to extend their window of exclusivity.

In 2012 the Federal Trade Commission weighed in on a private lawsuit involving the acne drug Doryx, criticizing the practice of a brand company making “modest nontherapeutic changes to its product and effectively prevent[ing] generic competition, not because the reformulated product is preferred by consumers, but simply because it is different.”

For all its cunning avoidance of the law, Forest Labs’ strategy doesn’t seem to be that successful – even though 4 in 10 users have switched to Namenda XR, now there’s a shortage of it that has forced the company to extend the availability of the older tablets beyond its original deadline of Aug. 15. The company’s website now puts the deadline sometime this autumn.

Namenda sales are expected to decline after the generics arrive, but the lawsuit says that Forest Labs is trying to preclude Medicare Part D plans from even including the older tablets on the list of reimbursable drugs.

As The Times noted, “The law on product hopping, however, is not clear. While courts might want to preserve generic competition, they have historically been reluctant to interfere with the ability of a company to introduce new products.”

The paper cited the example of Nexium, made by AstraZeneca. When it was introduced, critics said it was only a slight modification of its previous heartburn drug Prilosec.

A court dismissed a lawsuit against AstraZeneca filed by Walgreens, ruling that even if Nexium’s introduction depressed sales of the generic Prilosec, it didn’t violate antitrust rules.

But Forest Labs’ plan to remove its drug from the market is different from AstraZeneca, which left Prilosec on the shelves, essentially inviting Nexium and Prilosec to vie for market share. Nexium made billions every year.

In contrast, in the Abbott Laboratories case, involving the cholesterol-lowering drug TriCor, a court declined to dismiss lawsuits, partly because Abbott had taken the older versions off the market.

Generic companies, pharmacies, health plans and many states sued Abbott, which settled for an amount estimated to be more than $250 million.