Executives at drug company Actavis knew they had to move fast to avoid a plunge in sales of their top-selling drug, Namenda, a treatment for Alzheimer’s disease that would lose patent protection in July.
When that happened, generic knockoffs would flood the market, and doctors and pharmacists could switch patients to the lower-cost equivalents.
With $1.5 billion in annual sales at stake, Actavis took action: Late last year, it touted its new, extended-release version of the drug, called Namada XR, which can be taken once a day and carries patent protection until 2029. Such a move is not unusual, but Actavis took the campaign further by limiting distribution of the original tablet to a single mail-order pharmacy and requiring doctors to submit a note stating that the old drug was “medically necessary.”
Those efforts are the focus of a closely watched antitrust lawsuit that pits the international drug-maker against New York’s attorney general, who says Actavis’s strategy was designed to force patients to switch to another patented drug and discourage them from moving to soon-to-be-released generics. The suit calls the strategy anticompetitive and illegal.
Actavis was trying to “squeeze every last dollar out of their Namenda franchise . . . with no concern about the effects . . . on highly vulnerable Alzheimer’s patients,” Attorney General Eric T. Schneiderman (D) contented in court filings.
Brought by a regulator, rather than a rival drug company, the lawsuit signals growing activism by government “at a time when patients, physicians and payers are hyper-aware of rising drug costs,” Michael Shuster, an attorney with Fenwick & West, wrote in an article about the case on the law firm’s Web site.
New York won an injunction in December that blocked Actavis from limiting access to Namenda, a ruling appealed by the drug-maker and now before the U.S. Court of Appeals for the 2nd Circuit. A decision could come as soon as next month and might help define how far drug-makers can go to protect brand-name profits from generic rivals when drug patents expire.
Dublin-based Actavis, which bought Namenda’s developer, Forest Labs, last summer, said it has not violated any laws. It describes its moves as a common-sense business decision to shift customers to what it describes as a better, more convenient product.
Efforts by drug-makers to bolster their market share in the face of generic competition are not new.
But two things stand out about this case: Although five generic drug-makers say they will bring drugs to market in July, there are no current alternatives to Namenda or Namenda XR, since no other Alzheimer’s drug works the same way. The drugs, which have the same active ingredient, slow the progression of symptoms in some patients but are not a cure.
The other is the company’s strategy to get patients to switch to its new, patent-protected version, making it less likely that their pharmacists or doctors would substitute generics when those became available, critics say.
Jerry Avorn, a professor at Harvard Medical School and author of “Powerful Medicines: The Benefits, Risks, and Costs of Prescription Drugs,” takes issue with the drug-maker’s requirement that patients get a doctor’s note to stay on the older drug.
“If there’s a legitimate concern about a drug, then doing [that] is understandable,” he said. “But it’s not okay to do it because a company wants to make it harder to get a more affordable drug.”
In statements at the time, Actavis said it expected that only about 3 percent of patients would get such a note to stay on twice-a-day Namenda.
Many companies have tried to outrun or thwart generic competition, sometimes by finding ways to extend patents, such as by reformulating drugs as extended release, or changing from tablets to capsules. In other cases, they have paid generic firms not to launch — a tactic called “pay-for-delay” that the Supreme Court recently ruled could violate antitrust laws in some cases.
“This industry is under a lot of scrutiny because the cost savings in the generic world are pretty high for the public,” said attorney David Rosen, head of the Food and Drug Administration practice at Foley & Lardner in the District.
Aggressive marketing of replacement drugs is also common. Nexium, for example, became one of the world’s top-selling drugs after AstraZeneca launched a campaign touting it as “the new purple pill” after the patent on its profitable older version of the drug, Prilosec, expired in 2001.
But “forced” switches, where older versions of drugs are taken off the market or restricted before generics establish a foothold, have been more problematic.
Actavis argues that patients and their families could still choose Namenda. The company also argues that it did not violate antitrust laws because limiting distribution of the drug would not stop generic rivals from coming to market in July.
“Withdrawing an old drug to better promote the new one is common throughout industries and fosters incentives to innovate,” its brief says. The injunction to stop it “breaks dangerous new ground,” because no court before has “nullified a manufacturer’s valid patent rights and commandeered its factory to aid future competitors.”
Briefs supporting Actavis’s position were filed by some antitrust attorneys, economists and the pharmaceutical lobby.
Consumer groups, including Consumers Union and the retiree group AARP, as well as some doctor groups and health insurers, have backed the New York attorney general.
Actavis, by trying to sharply limit production and distribution of Namenda before generics hit the market, “crossed a line between persuading and coercing individuals into taking the Namenda XR,” AARP writes in an amicus brief.
This article was produced through a collaboration between The Washington Post and Kaiser Health News, an editorially independent news service that is a program of the Kaiser Family Foundation.