Actavis plc (NYSE:ACT) is in hot water with the New York Attorney General’s office over practices they feel are manipulative of patients. As Meg Tirrell reported on CNBC today, the drug company is employing a practice called “hard switching” with patients currently on their existing Alzheimer’s drug Namenda, the patent on which is about to expire.
“This is a lifestyle management technique that pharma companies use a lot. However the New York Attorney General’s office is taking issue with what Actavis is doing here, saying this is manipulative to patients, especially to elderly patients with Alzheimer’s. It’s basically taking away that other, potentially cheaper generic copy when that goes generic next year, and trying to switch them onto a more expensive product, which they’ll have no choice to, because they’re stopping manufacturing the first product,” Tirrell said.
Actavis plc (NYSE:ACT)’s new Alzheimer’s drug Namenda XR, which is taken once daily as opposed to twice daily with the current version of the drug, will have new patents protecting it, potentially allowing Actavis plc (NYSE:ACT) to continue reaping the benefits of the near monopoly they currently enjoy, if they can coerce patients to switch to it.
In the lawsuit, New York Attorney General Eric Schneiderman is attempting to force Actavis plc (NYSE:ACT), along with its subsidiary Forest Labs, to halt their planned discontinuation of the original Namenda, and subsequent attempt to maintain their monopoly through forced switching to Namenda XR. Schneiderman is also seeking civil damages and penalties.
Despite the lawsuit, Actavis plc (NYSE:ACT) is actually up a healthy 1.67% today. As Tirrell reports, this is not related to the lawsuit, but rather the fact that Actavis plc (NYSE:ACT) continues to be rumored as a potential takeover target of Pfizer Inc. (NYSE:PFE)’s if another attempt at acquiring their number one target, AstraZeneca plc (ADR) (NYSE:AZN), fails to come to fruition.
Actavis plc (NYSE:ACT) is up over 10% throughout the last month as the rumors first started to swell, and up 42% for the year to close today at $238.76.
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