Allergan pays $750m to avoid Alzheimer’s drug lawsuit

Allergan has agreed to pay $750 million to settle lawsuits in the US brought by direct purchasers of its Namenda Alzheimer’s drug in the US.

The settlement means that Dublin, Ireland headquartered Allergan has avoided a trial that was due to start today, without admitting any wrongdoing on its part, and will absorb the charge in its third-quarter earnings due to report on 5 November.

The class-action suit claims that the company blocked access to lower-cost generics of its immediate-release Namenda (memantine) product in 2014 by forcing patients to switch to a longer-acting, more expensive version of the drug called Namenda XR – a practice known as ‘product hopping’.

Allergan – known at the time as Actavis and the parent of Namenda manufacturer Forest Laboratories – intended to stop supplying twice-daily Namenda in 2014 and replace it with a once-daily formulation ahead of the launch of generic versions of the original product in 2015.

The lawsuit alleged that Forest, which at the time was headed by Allergan chief executive Brent Saunders, also entered into an illegal agreement with generic manufacturer Mylan to keep its version of memantine off the market.

A federal judge issued an injunction preventing Allergan from switching patients later in 2014, which was upheld on appeal.

The latest class-action suit represents direct purchasers of Namenda, and was launched shortly after New York Attorney General Eric Schneiderman challenged the company, saying it was both unethical and illegal under antitrust law, and agreed a settlement with Allergan in 2015.

In that earlier settlement, Allergan paid $172,000 in litigation expenses in the earlier settlement and agreed to withdraw a challenge to the appeals court ruling in the US Supreme Court.

The class-action suit claims that plaintiffs had paid too much for Namenda because Allergan’s actions delayed the entry of generics into the market, and was given a green light to proceed in 2016, with Allergan’s attempt to throw it out defeated last year.

Namenda XR grew to become a $450 million product in 2017, but lost patent protection in February 2018 and has since seen sales decline to $71 million last year and just $16 million in the first half of 2019.

The settlement comes as AbbVie is trying to complete its $63 billion merger with Allergan, and lays to rest one outstanding legal issue as the merger makes it way through the regulatory approval process.

Last month Allergan and AbbVie received a second request from the Federal Trade Commission (FTC) for information on the transaction. Allergan has already agreed to divest two drug products to avoid antitrust issues.