Allergan's Forest Labs Pays $750 Million to Settle Class Action Suit Over Alzheimer's Drug

Allergan’s subsidiaries, Forest Laboratories LLC, Forest Laboratories, Inc., and Forest Laboratories Holdings Ltd. paid a total of $750 to settle a class action lawsuit over its Alzheimer’s drug Namenda. Actavis, which later changed its name to Allergan, acquired Forest in June 2014. The case was set to face trial on October 28, 2019.

The plaintiffs in the case alleged that Forest intentionally attempted to delay and impair generic competition of its immediate-release formulation of Namenda. The allegations included an illegal agreement with generic competitor Mylan, and then organizing a “’hard switch’ product hop from immediate-release Namenda to extended-release Namenda XR. As a result of Forest’s conduct, purchasers were injured because from the loss of earlier, unconstrained, lower priced generic competition.”

Allergan and Forest attempted to have the case dismissed, but that was denied on September 13, 2016. 

Allergan did not admit to any wrongdoing when it finalized the settlement. It expects to take a pre-tax GAAP charge of $750 million in its third-quarter 2019 earnings.

In February 2014, Forest Laboratories announced plans to discontinue the sale of Namenda HCl 5mg and 10mg tablets effective August 15, 2014. It was going to continue marketing the oral Namenda and once-daily Namenda XR. Both were indicated for treatment of moderate to severe Alzheimer’s disease.

At the time, Marco Taglietti, then Forest’s chief medical officer and executive vice president, Drug Development and Research, stated, “Namenda XR offers important benefits, including convenient, once-daily dosing, which is particularly meaningful for this patient population and their caregivers. Our decision to focus on Namenda XR is supported by these benefits as well as the positive feedback we’ve received from physicians and caregivers since the launch of Namenda XR. This conversion also allows us to streamline our resources and explore innovative new compounds that may be effective for the treatment of Alzheimer’s disease, including the fixed-dose combination of Namenda XR and donepezil, which is under development.”

The company indicated at the time that doctors could change patients from Namenda to Namenda XR the next day without making dosage changes (titration).

It was noted in 2015 that both Dr. Reddy’s Laboratory in India and Mylan had launched generic Namenda. As a result, Allergan expected a drop in Namenda sales of about $200 million.

In 2014, Namenda brought in $1.5 billion in revenue. However, the switch-over to Namenda XR reportedly involved 40% of its patients, which mitigated the generic competition to some extent. Allergan also launched an alternate, Namzaric, which combines the main ingredient from Namenda with the main ingredient from Aricept (donepezil), marketed by Eisai. Namzaric was launched in September 2016.

There was very clearly a drop in Namenda sales. In its fourth-quarter 2018 reporting, Namenda had net revenues in the fourth quarter 2018 of $1.07 million compared to $97.8 million in the same quarter in 2017. The company stated that this was caused by the patent loss of exclusivity for Namenda XR.

Since its launch in 2016, Namzaric sales have steadily grown and are expected to continue growing. Peak sales are forecast for 2025 of $574.1 million.