Drug manufacturer Allergan and New York State have settled a heated antitrust lawsuit that accused Allergan of switching patients from an older dementia pill to a newer and more expensive version to avoid generic competition. As part of the deal, Allergan agreed to pay $172,000 in litigation expenses and to withdraw an appeal filed last month with the U.S. Supreme Court. The suit triggered debate over the controversial practice known as “forced switching” or “product hopping,” in which a drug manufacturer reformulates a medicine to receive a life-extending product patent and withdraws the original product before generic competitors can enter the market.
New York attorney general Eric Schneiderman agreed to end his investigation into the decision made by Actavis (which has since merged with Allergan) to stop manufacturing the original, twice-daily Namenda IR before generic versions of the drug were to debut in July 2015. The investigation began under suspicion that Actavis was attempting to force patients onto the newer, once-daily version of the drug, Namenda XR, which faces no generic competition. Schneiderman had previously stated that this maneuver was “unethical and illegal,” because it blocked competition and effectively eliminated patient choice.
As part of the settlement, Allergan agreed to withdraw the appeal it filed with the U.S. Supreme Court last month. In its filing, Allergan contested an injunction to keep Namenda IR on the market issued by U.S. District Judge Robert Sweet of the Southern District of New York in December 2014. The Second Circuit upheld the injunction in May 2015.
“The company believes that the novel and unprecedented legal holding in the court's decision is limited to the facts and findings in this particular case,” Robert Bailey, Allergan’s executive vice president and chief legal officer, said in a statement explaining its willingness to drop the appeal.
Allergan has admitted no wrongdoing in the settlement. Further, the company contends that the larger issue over the legality of product hopping remains unresolved. Said Bailey, Allergan remains “committed to clarifying the law in this area” in the manner laid out in its Supreme Court petition, and it anticipates “opportunities to do so in the future.”
— Eric W. Shannon, Debevoise & Plimpton LLP, New York, NY