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Post date: November 25 2015

A.G. Schneiderman Announces Resolution Of Lawsuit That Protected Alzheimer’s Patients From Anticompetitive Tactic Aimed At Maintaining Higher Drug Prices

Groundbreaking Antitrust Lawsuit Has Allowed Low-Cost Generic Alzheimer’s Drugs To Enter Market Unimpeded; Prevented Drug Company From Forcing Patients To Change Medications As Part Of Strategy To Impede Competition

Schneiderman: We Will Continue To Protect New Yorkers From Anticompetitive Practices By Drug Manufacturers

NEW YORK – Attorney General Eric T. Schneiderman today announced that his office has resolved the antitrust lawsuit it brought in September 2014, which has successfully prevented pharmaceutical manufacturer Allergan plc (previously named Actavis plc) from forcing Alzheimer’s patients to switch medications as part of an anticompetitive strategy designed to maintain high drug prices.  In December 2014, a federal judge granted New York’s request for an injunction and prohibited Allergan from engaging in the controversial tactic – sometimes called a “forced switch” – which would have needlessly disrupted the treatment plans of these patients solely to protect corporate profits.  Because the injunction protected competition and allowed low cost generic drugs to enter the market unimpeded, the Attorney General’s office has determined that it is no longer necessary to continue legal action.

“Our lawsuit prevented Allergan from pursuing its plan to block competition, thus preserving patient choice for hundreds of thousands of Alzheimer’s patients, and protecting the public from bearing hundreds of millions’ of dollars in unnecessary drug costs,” said Attorney General Schneiderman.  “Excessive drug prices are a major problem in this country.  My office will continue to protect patients and the public from anticompetitive practices that result in artificially inflated drug prices.”

In February 2014, Allergan’s subsidiary Forest Laboratories announced a plan designed to impede competition from low cost generic drugs for its blockbuster Alzheimer’s drug Namenda IR.  Forest’s plan was to withdraw Namenda IR from the market a few months before generic versions became available, in order to force Alzheimer’s patients to switch to a very similar drug manufactured by Forest that had a longer lasting patent – Namenda XR.  Forest knew that once patients were forced to switch to the new drug, they would likely remain on that medication even after generics for Namenda IR entered the market, due to the practical difficulties of switching back.  The tactic was expected to dramatically curtail the ability of generics to compete in the market, and to cost the public hundreds of millions – if not billions – of dollars in unnecessary drug costs. 

In September 2014, the New York Attorney General’s office filed its groundbreaking lawsuit seeking to stop the “forced switch,” and sought a preliminary injunction from the federal court in New York.  After a five day evidentiary hearing, in December 2014 the Honorable Robert W. Sweet granted New York the requested injunction, and ordered Forest to preserve patient choice by continuing to make Namenda IR available to Alzheimer’s patients until the summer of 2015, when generics were expected to enter the market.  In May 2015, a three judge panel from the United States Court of Appeals for the Second Circuit unanimously affirmed Judge Sweet’s decision in favor of the Attorney General.

As a result of the injunction, Alzheimer’s patients have not been forced to switch from Namenda IR to Namenda XR, and instead have been able to select which drug to use based on their and their physicians’ views of which drug is best for them.  By summer 2015, low cost generic versions of Namenda IR became widely available in the market.  Accordingly, as a result of the Attorney General’s lawsuit, patients who wished to remain on Namenda IR during early 2015 and then switch to the generic version when it became available over the summer were able to do so without any disruption in their medical treatment.  In addition, Alzheimer’s patients who wish to take Namenda XR instead of Namenda IR are also free to do so.  The injunction expired by its own terms in August 2015.

A recent study by the federal Department of Health and Human Services indicates that New York’s lawsuit may save U.S. taxpayers billions of dollars over the next several years.  That study is available here

As a result of the success of the Attorney General’s lawsuit, the case may now be dismissed.  Pursuant to a settlement agreement entered into by the parties, the lawsuit will be dismissed, and Allergan will withdraw its request for U.S. Supreme Court review of the decisions issued in favor of the Attorney General. 

This matter was led by Antitrust Bureau Chief Eric J. Stock, Deputy Bureau Chief Elinor R. Hoffmann, Executive Deputy Attorney General for Economic Justice Karla G. Sanchez, and Assistant Attorneys General Saami Zain, Jeremy R. Kasha, and Zachary W. Biesanz.

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