November 9, 2015
By Alex Keown, BioSpace.com Breaking News Staff
WASHINGTON – More pharmaceutical companies are facing legal and political scrutiny over the prices of prescription medication, after the Merck & Co. and Eli Lilly and Co. reported they are the subject of an investigation by the U.S. Attorney’s Office in Pennsylvania over proper pricing information with Medicaid, Reuters reported this morning.
In a 10-Q regulatory filing last week, Merck said it had received a civil investigative demand from the U.S. Attorney’s office over the pricing of Dulera, an asthma inhaler launched in 2010. The attorney’s office is looking at the company’s pricing in regards to “certain pharmacy-benefit managers and Medicare Part D plans,” the company said in its filing. Merck said it was cooperating with the investigation.
Merck is also a defendant in approximately 20 active federal and state lawsuits alleging personal injury as a result of the use of Vioxx. Most of these cases are coordinated in a multidistrict litigation in the U.S. District Court for the Eastern District of Louisiana, the company said in its filing with the U.S. Securities and Exchange Commission.
Eli Lilly also said in its 10-Q filing the attorney’s office is conducting an inquiry “concerning our treatment of certain distribution service agreements with wholesalers when calculating and reporting Average Manufacturer Prices in connection with the Medicaid drug rebate program.” Lilly said it is voluntarily responding to the request.
An Eli Lilly spokesperson told Dow Jones Business News the company believes its accounting practices related to the Medicaid drug rebate program are correct.
Pfizer Inc. is also the subject of an investigation that its Wyeth unit overcharged Medicaid programs by not reporting its best prices for the heartburn drug Protonix, Dow Jones Business News said. Pfizer has said the allegations have no merit.Lilly is also the subject of a multiple lawsuits involving its blockbuster drug Cymbalta over patients claiming injuries following the discontinued use of the drug, the company said in its filing.
Since the companies disclosed the investigations, for Eli Lilly is slightly down to $79.39 per share and for Merck is also slightly down to $54.22 per share.
CNN reported stock prices for the pharmaceutical industry has been on the decline since former U.S. Secretary of State Hillary Clinton, now a candidate for the Democratic presidential nomination, tweeted a threat of capping the prices of prescription drugs to prevent “price gouging,” which sent biotech stock prices plummeting in September. Clinton has proposed to cap monthly out-of-pocket costs for prescription drugs at $250. Additionally, Clinton’s campaign said she would also seek to curb the amount of money drug companies can spend on advertising. Following Clinton’s tweet, the Nasdaq Biotechnology Index dropped 4.4 percent and the SPDR S&P Biotech ETF dropped by 6 percent.
One company that has certainly seen its stock crashing down over the past few months is Valeant Pharmaceuticals International Inc. , which is being examined not only for drug pricing, but also for accounting practices associated with a specialty pharmacy company it worked with. Since a high of $259.98 per share price on Aug. 4, Valeant’s has plummeted to a year-low of $81.77 per share. The stock is currently trading at $78.81 per share.
Valeant is facing scrutiny from U.S. lawmakers and two U.S. attorney’s offices over pricing of drugs acquired through acquisitions. Valeant is under fire for a price increase of two recently-acquired cardiac drugs, Nitropress and Isuprel, after the company acquired Salix Pharmaceuticals, Ltd. . Valeant then increased the prices for those drugs by 212 percent and 525 percent, respectively. Valeant acquired the two drugs in April.
Other companies that have been the subject of ridicule over price hikes include Turing Pharmaceuticals, which increased the price of the toxoplasmosis drug Daraprim by 5,000 percent after it acquired the drug in August. Rodelis Therapeutics acquired the tuberculosis drug Cycloserine in August and raised the cost of a 30-day treatment of $500 to $10,800. Facing the backlash, Rodelis agreed to give the drug back to the Purdue Research Foundation, which has oversight of the manufacturing operation. However, now that the foundation has regained control, the price of the drug did not return to $500. Rather, 30 tablets now cost $1,050.
