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AARP Fights Anticompetitive Prescription Drug Behavior

AARP’s brief supported the New York Attorney General’s (AG) challenge of Actavis’ planned withdrawal and restricted access to a drug used to treat symptoms of moderate to severe Alzheimer’s disease. The AG alleges that Actavis’ conduct would limit competition from generic versions of the former drug by forcing patients to switch to a new version of the drug which would not be available as a generic.

An appeals court has ordered Actavis to make its original formulation of Namenda available to consumers, effectively stopping Actavis from forcing many consumers to switch to a newer version.

Background

In September 2014, New York State’s Attorney General sought an injunction to prevent Actavis from restricting access to, and eventually withdrawing from the market, a drug used to treat symptoms of moderate to severe Alzheimer’s disease.The AG alleged that Actavis was seeking to withdraw the drug (known as Namenda IR) to frustrate the entry of generic competitors by forcing consumers to switch to a newer, but functionally equivalent, version of Namenda.

Namenda IR is the only product in its class that treats symptoms of the more advanced stages of Alzheimer’s. When the patents for Namenda IR drew close to their expiration date, Actavis introduced an “extended release” version known as Namenda XR.  In doing so, Actavis enjoyed a renewed period of exclusivity for Namenda XR—while the patents on Namenda IR were to expire in 2015, the patents for Namenda XR are not expected to expire until 2029. Actavis can also charge higher prices for Namenda XR as a name-brand product without any generic competitors.

Actavis engaged in an aggressive marketing campaign to consumers and physicians highlighting the purported benefits of Namenda XR. According to the AG, when the marketing campaign failed to generate enough of a demand for Namenda XR, Actavis announced its plans to withdraw Namenda IR from the market and petitioned the Centers for Medicare and Medicaid Services to remove Namenda IR from its list of approved drugs.  Actavis also restricted consumers’ access to Namenda IR by requiring physicians to complete a written certification of the “medical necessity” of Namenda IR instead of using Namenda XR. The AG’s case alleges that these measures decimated the market for Namenda IR and caused nearly half of Namenda IR consumers to switch to Namenda XR.  The AG won an injunction that requires Actavis to offer Namenda IR on the same terms and conditions that existed before the introduction of Namenda XR; that injunction was appealed to the U.S. Court of Appeals for the Second Circuit.

The practice of forcing such changes on consumers is a form of “evergreening” (also known as “product hopping” or “product switching”). AARP’s and three other advocacy organizations’  friend-of-the-court brief filed by attorneys with AARP Foundation Litigation in support of the AG’s action detailed the adverse effects such noncompetitive efforts have on consumers of prescription drugs, including artificially inflating costs, eliminating competition, and causing unjustified disruption in an individual’s medication regimen and routine. The brief also described how Actavis’ conduct intrudes upon the individual’s right to make decisions about their own health care.

The U.S. Court of Appeals for the Second Circuit upheld the district court’s injunction in May 2015. Generic versions of Namenda are now currently available.

What’s at Stake

Anticompetitive conduct harms individuals by increasing medication costs and reducing choices. Studies show that higher drug prices and less competition leave lower-income individuals to reduce or forego medication in order to meet other needs, leading to adverse and often irreversible health complications. Anticompetitive “evergreening” also disrupts individuals’ medication regimens with little warning or choice and can lead to poor adherence with medication. Finally, anticompetitive “evergreening” interferes with an individual’s right to direct his/her own health care and interferes with physician-patient decisions.

Case Status

People of the State of N.Y. v. Actavis was decided by the U.S. Court of Appeals for the Second Circuit.