Market Place
As 2016 draws to a close, we look at some recent cases of (alleged) drug
price-fixing and examines its implications on a fast-changing global
pharmaceutical industry.
Last week, federal prosecutors in the US unsealed criminal information against Jeffrey
Glazer, the former CEO and founder of Heritage
Pharmaceuticals — a generic drug maker which was sold to India’s Emcure
Pharmaceuticals in 2011.
This way, Heritage Pharmaceuticals became the base of Emcure’s US operations. It generates several hundred million dollars of annual revenue, according to IMS Health data.
Federal prosecutors have also filed criminal information against Heritage’s former president, Jason Malek, who is Glazer’s brother-in-law.
Interesting, Emcure was placed on the US Food and Drug Administration’s (FDA) import alert list last year. The warning letter posted earlier this year unveiled data integrity violations, thereby making
it a part of the list of Indian companies facing compliance troubles. The
Heritage Pharmaceutical case only compounds the troubles for Emcure.
The ring leader of price manipulation
Following the federal criminal investigation, 20 states in the US filed a lawsuit against Mylan, Teva and four
other generic drug makers, saying they conspired on the pricing of two common
generic drugs.
The lawsuit, filed in the district court of Connecticut, names Heritage
Pharmaceuticals as a “ring leader” of the price manipulation, and also lists Mayne,
Aurobindo
and Citron
as participants.
According to federal prosecutors, Glazer participated in a price-fixing
conspiracy related to two generic drugs, doxycycline
hyclate (used primarily to treat severe acne) and glyburide
(an oral diabetes medicine).
The government says between April 2013 and December 2015, Glazer and his
co-conspirators worked together to fix and maintain prices of doxycycline
hyclate.
The price of doxycycline increased 8,000 percent — from US $ 20 for 500 tablets to US $ 1,849 between October 2013 and May 2014 — according to Senator Amy Klobuchar.
According to the complaint, Glazer and Malek communicated with Mylan
executives over phone calls and emails and agreed to allocate market share.
They also agreed not to indulge in a price war for doxycycline.
Mylan agreed to walk away from at least one large national wholesaler and
one large pharmacy chain to let Heritage increase its market share, the
complaint says.
Malek also had a direct relationship with an unnamed Teva employee and the
two agreed to raise prices on glyburide, the complaint adds.
The embezzling brothers-in-law
Heritage fired Glazer and Malek in August.
In November, the company filed a massive racketeering lawsuit against the brothers-in-law, accusing Glazer and Malek of running “a criminal enterprise” that included five dummy corporations — Tal Pharma LLC, Dorado Pharma
LLC, Element Pharma LLC, VetGen Pharma LLC, and Astor Pharma LLC — and numerous schemes “to steal the company’s profits and property.”
In a detailed 130-page complaint filed in federal court in New Jersey, Heritage claimed that Glazer and Malek had the company sell deeply discounted drugs to their dummy corporations that sold the drugs to Heritage’s own customers that paid the market price.
The complaint alleges that Glazer and Malek redirected US $ 9 million worth of Heritage’s sales to one of these dummy corporations — Dorado Pharma — between 2012 and 2015.
Heritage also claimed that Glazer and Malek embezzled the company’s intellectual property through the transfers of abbreviated new drug applications (ANDA).
The accusations against Glazer and Malek
Here is a list of some accusations made by Heritage against Glazer and
Malek:
• “Over the course of at least seven years, Glazer and Malek looted tens of millions of dollars from Heritage by misappropriating its business opportunities, fraudulently obtaining compensation for themselves, and embezzling its intellectual property.”
• “The magnitude of defendants’ theft is captured in an August 2015 text message exchange, in which Glazer told Malek that their scheme had netted US $ 466,000 in profit that day.”
• “Similarly, during a text message exchange with Malek in September 2015, Glazer spoke boastfully about the “healthy orders” coming into Dorado Pharma, one of their dummy corporations, and his conclusion that they would generate US $ 2.85 million. Malek later confirmed that his calculations showed profits totalling more than US $ 2.5 million.”
• “Malek even went so far as to falsely pretend on multiple occasions to be a female customer service representative named “Judy Jones” while communicating with Heritage employees through an email account associated with Dorado Pharma, one of the defendants’ dummy corporations.
• “In May 2012, Glazer instructed a Heritage employee to complete an FDA submission transferring the company’s ANDA for the generic drug Ketoprofen to defendants’ company Dorado Pharma — with no compensation of any type to Heritage. Shortly thereafter, Glazer and Malek entered into contracts for the manufacture and marketing of Ketoprofen through Dorado Pharma.”
• “In February 2016, Glazer sold an ANDA held by Heritage at a below-market price to a close business associate. In exchange for this favorable sales price, the purchaser agreed to pay kickbacks to Glazer and Malek through Tal Pharma.”
• “Shortly after his termination from Heritage, Glazer also embezzled more than six million membership rewards points from the company’s American Express account. As the primary cardholder for Heritage’s account, Glazer had sole access to these points and the ability to transfer or redeem them at his sole discretion. Based on information and belief, Glazer has converted these membership rewards points accrued by the company, with an estimated value of US $ 60,000, for his own personal benefit”
Price fixing case against Impax
While US regulators filed charges of price-fixing, another US-based generic company — Impax
Laboratories — received a subpoena in the same case.
According to the Financial Times, Impax’s pricing came under scrutiny yet again this week.
The company started selling mebendazole
this year at an average wholesale price of US $ 442 per pill. Due to this steep
price, the two-pill treatment for pinworm (a parasitic infection) costs US $
884 in the US, where it is a prescription-only drug.
In the UK, however, it is available over the counter for £6.99 (or US $ 8.65) for a pack of four pills, or £1.75 (US $ 2.17) each. In the developing world it can be bought for less than 1 cent per pill.
Mebendazole is on the World Health Organisation’s list of essential medicines. Pinworms are common in
children and affect 200 million people a year worldwide. It is recommended that
a family takes treatment for this infection at the same time.
Therefore, a family of four would have to shell out a whopping US $ 3500 or
more for the treatment.
Drug prices under scrutiny in UK too
Earlier this month, Pfizer was fined £84.2 million (US $ 104.24
million) in the UK by the Competition and Markets Authority (CMA) for ramping
up the cost of an epilepsy drug to the NHS by as much as 2,600 percent.
Issuing its biggest fine, the CMA had said the “extraordinary price rises have cost the NHS and the taxpayer tens of millions of pounds”. Pfizer, however, had rejected CMA’s findings.
This week, Allergan
was provisionally found to break competition law by raising the price
of 10 mg hydrocortisone tablets by more than 12,000 percent.
Hydrocortisone tablets are used as the primary replacement therapy for people whose adrenal glands do not produce sufficient amounts of natural steroid hormones, as in the case of Addison’s disease. The condition can be life threatening.
Our view
Across the world, pricing of both branded and generic drugs is coming under
scrutiny. As political winds push for faster drug approvals and the possibility
of cross-border trade of drugs, the pharmaceutical industry should brace for a
2017 where routine business practices will most likely stop becoming
routine.
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https://www.pharmacompass.com/radio-compass-blog/emcure-s-us-ceo-looted-millions-fixed-prices-with-mylan-teva-and-others
#PharmaFlow by PHARMACOMPASS
22 Dec 2016
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GSK, Google form first bioelectronics firm; 11 generic companies benefit from the Teva Allergan deal
This week,
Phispers brings to you the details of the bioelectronics firm formed by GSK and
Google. There is also news on companies like Teva, Takeda, Jinan Jinda and Eli
Lilly, besides two other news snippets pertaining to the FDA -- while the first
one pertains to generic approvals, the other one relates to an additional black
box warning on a few antibiotics. GSK and Google
join hands to form first bioelectronics startupGlaxoSmithKline and Google’s parent company – Alphabet – have joined hands to create a new company that is focused on fighting diseases by targeting electrical signals in the human body. This way, GSK and Alphabet’s life sciences unit – known as Verily Life Sciences – will be jump-starting a new field of medicine known as bioelectronics.Verily Life
Sciences and GSK will together contribute US $ 715.12
million
over seven years to the startup Galvani Bioelectronics. The startup will develop
miniature electronic implants for the treatment of asthma, diabetes and other
chronic conditions. The
implantable devices developed by Galvani, which is owned 55 percent by GSK and
45 percent by Verily, can modify electrical nerve signals. The aim is to
modulate irregular or altered impulses that occur in many illnesses.The
new company
will be based at GSK’s Stevenage research center north of London, with a second research hub in South San Francisco.The announcement comes just weeks after GSK had said it was going to use Apple’s HealthKit to conduct clinical trials.Three years ago, GSK had first unveiled its ambitions in bioelectronics in the journal – Nature. Bioelectronic remedies attach battery-powered implants the size of a grain of rice (or even smaller) to individual nerves to correct faulty electrical signals between the nervous system and the body’s organs.GSK believes altering these nerve signals could open up the airways of asthma patients, reduce inflammation in the gut from Crohn’s disease and treat patients with a range of other chronic ailments such as arthritis. So far, the implants have only been tested on animals but the aim is to produce treatments that will supplement or replace drugs that often come with side-effects.GSK
has been working on bioelectronic medicines since 2012 in a push to develop new
patentable treatments, since its Advair respiratory treatment faces competition
from generic versions. It has invested US $50 million in a venture capital fund
for bioelectronics and provided funding to scientists working in the field. Teva divests 79
products to 11 generic players to close Allergan dealTeva
Pharmaceutical Industries – the world’s largest generics drug company – won a US
anti-trust approval to purchase Allergan's generics
business, after agreeing to divest 79 generic drugs to rival firms. This was arrived
at to settle Federal
Trade Commission (FTC) charges that its proposed US $ 40.5 billion acquisition of Allergan’s generic pharmaceutical business would be anti-competitive. The remedy requires Teva to divest the drug portfolio to 11 firms, and marks the largest drug divestiture order in a FTC pharmaceutical merger case.The Teva-Allergan deal, which was announced in July 2015, solidifies Teva’s position as the world's largest maker of generics while freeing Allergan to focus on branded drugs.The
companies that
have acquired
the divested products are Mayne Pharma
Group, Impax
Laboratories, Dr Reddy’s Laboratories, Sagent
Pharmaceuticals, Cipla Limited, Zydus Worldwide
DMCC, Mikah Pharma, Perrigo Pharma
International, Aurobindo
Pharma USA,
Prasco and 3M Company. Eli Lilly CEO
steps down; company under probe by US Justice Department Eli Lilly CEO John
Lechleiter has stepped down after steering the pharma company through long R&D droughts. The company’s president David Ricks will move up to the top spot. And after a brief spell as executive chairman, Lechleiter will leave the company next spring.Lechleiter
has been the company's CEO since April 1, 2008, and the chairman of its board
of directors since January 1, 2009.The
announcement has come at a time when Eli Lilly has been asked by the
Justice Department to disclose information on relationships with pharmacy benefits
managers (PBMs), the companies that negotiate prices and set reimbursement
conditions.It
has not been clear what exactly the department of justice is looking for. In
the past, drug makers such as Novartis and AstraZeneca have agreed to
pay fines and penalties to settle allegations pertaining to PBMs. FDA continues
to race ahead with generic approvals The
American regulator has reduced its pile of ANDA (abbreviated new drug
applications) by about 500
applications in the first six months of 2016. The FDA has also approved 315 more ANDAs over the same time period and has sent 66 more complete response letters — or rejections — to drug makers.This
news comes after Bloomberg reported
last month that the FDA has become ‘something of a bogeyman’ for India’s stock markets by approving generic drug applications from India at a record place. Similarly, PharmaCompass
had reported last week that Indian
companies have been fixing compliance issues. China’s Jinan Jinda fails another EDQM inspection; compliance troubles in Denmark In
regulatory news from across the world, Jinan Jinda, a Chinese API
manufacturer that had failed an inspection by Italian regulators in June 2015,
had more bad news awaiting it a year on. In
a June 2016
re-inspection, this time by the Spanish Health Authority, the regulator maintained the ‘facilities non-compliance standing’ since two critical observations were made and the corrections from the previous inspection “were found as not having been implemented in a satisfactory way”. And critical deficiencies were found on raw data.In
the June 2015 inspection, the critical observation was related to an unofficial
and non-controlled storage area containing mainly raw materials and finished
products which had been made
inaccessible to inspectors as the door had been removed and replaced with a panel fixed with
screws to the wall.Meanwhile,
the FDA issued an untitled letter (dated July 15, 2016) to Danish allergy
immunotherapy company ALK-Abelló (ALK) over manufacturing and quality control issues at its Horsholm, Denmark facility. The letter comes after a 12-day inspection of the facility in March 2016. During the inspection, the FDA had cited ALK for four “significant deviations” from cGMP requirements. Another black
box warning added to antibiotics like Cipro and LevaquinThe
FDA has upgraded
warnings on
certain antibiotics, such as Johnson & Johnson’s Levaquin, Bayer’s Cipro
extended-release tablets and Merck’s Avelox. The FDA had
added a black box warning in 2008 about the increased risk of tendinitis in
which the tissue connecting muscle to bone becomes inflamed. In
May this year, the FDA had advised restricting the use of fluoroquinolone antibiotic for certain uncomplicated
infections and had warned about the disabling side-effects of the drug.The new warning talks about long-term risks to the drugs’ current black box warning. The agency also advised using the drugs only for serious infections. Manufacturers of fluoroquinolone have faced thousands of lawsuits from patients who claim that their injuries were caused by the drugs. J&J alone faced 3,400 lawsuits over Levaquin’s links to tendon problems and has also settled many of those cases. Takeda to
overhaul R&D, downsize operations in the UKTakeda Pharmaceutical of Japan has
said it plans to build a new pipeline of drugs. It plans to revamp its
research operations at the cost of around US $ 727 million.. The
company also plans to close some of its R&D operations in the UK. Takeda is
beginning the first ‘consultation stage’ of the layoff process in the UK, which hosts a pre-clinical R&D operation in Cambridge as well as a development center headquarter with facilities in the UK, Switzerland and Denmark.Under the revamp, Takeda’s R&D activities will be concentrated in Japan and the US, the 235-year old drug company said in a statement. Takeda plans to now focus on the three therapeutic areas of oncology, gastroenterology and the central nervous system.“We need to first build new capabilities and embrace new ways of working,” Andy Plump, Takeda’s chief medical and scientific officer, said in the statement.
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https://www.pharmacompass.com/radio-compass-blog/gsk-google-form-first-bioelectronics-firm-11-generic-companies-benefit-from-the-teva-allergan-deal
#PharmaFlow by PHARMACOMPASS
04 Aug 2016
