Global Insight Perspective | |
Significance | Abbott Laboratories is to pay some US$184 million to settle lawsuits brought by generics companies, wholesalers and pharmacy groups in the U.S. over its alleged unreasonable blocking of generic competition to cholesterol drug TriCor (fenofibrate). |
Implications | The settlement will tacitly allow Abbott to maintain its current marketing practices for the drug, although these remain under investigation by the Federal Trade Commission. It will not, however, prevent the sale of generic versions of fenofibrate that have already received FDA approval. |
Outlook | Abbott is biding its time and banking on an imminent U.S. approval of follow-on drug TriLipix, which it is hoping will gradually take over from TriCor as one of its top-selling products. |
U.S. pharmaceutical company Abbott Laboratories will fork out some US$184 million to settle a group of lawsuits brought against it by a host of interested parties. The cases revolved around anti-cholesterol drug TriCor (fenofibrate), which Abbott markets in the United States under licence from Belgian pharma company Solvay. Abbott had been accused of making minor alterations to the drug's formulation in order to prevent generic versions from being launched.
The plaintiffs against Abbott range from generic drug maker Teva (Israel) to a host of U.S. drug wholesalers and retailers including Walgreen, Rite-Aid, Eckerd, Kroger and Maxi Drug. They claimed that not only had Abbott's product switching been made with the sole intention of blocking generic competition, but that it also forced wholesalers and retailers to keep buying the more expensive branded drug instead of making potential savings through purchasing generic versions. Two Solvay subsidiaries—Fournier Industrie et Santé and Laboratoires Fournier S.A.—were also the subject of the lawsuits.
In a filing made yesterday to the U.S. Securities and Exchange Commission, Abbott said that the US$184 million was a bulk sum to be divided among the settlements for the various lawsuits, and confirmed that it would record the payout as a specified item in its financial results for the fourth quarter of 2008. Additionally, the firm stated that "settlement agreements have also been reached resolving some of the other previously disclosed fenofibrate litigations," but said that "the amounts in those settlements are not material". In spite of these extra settlements, Pharmalot reports that Abbott still has to face an anti-trust lawsuit brought by some 25 U.S. attorneys general earlier this year over its marketing practice for TriCor, while an investigation by the Federal Trade Commission is also ongoing.
Abbott's U.S. sales of TriCor grew by 11.1% year-on-year (y/y) during the third quarter of 2008, and were worth US$334 million, while global sales of Solvay's fenofibrate franchise grew 16% y/y in comparable terms to stand at 345 million euro (US$434.4 million) over the first nine months of the year.
Outlook and Implications
Abbott has managed to placate its corporate naysayers for now, after making full courtroom use of the fact that product switching is technically legal in the United States. The fact remains, however, that the likes of Teva, Impax (U.S.) and Cipher (U.S.) are still free to market their generic versions of fenofibrate that have already received FDA approval. Abbott's settlement, while costly, will still be cheaper than awarding full damages to all the plaintiffs, and must be regarded as an interim move. This is because the company is banking on an imminent FDA approval for TriCor's follow-up drug TriLipix before the end of the current quarter. TriLipix was developed jointly by Solvay and Abbott, which has also included it in another combination product it is hoping to market. Abbott is less dependent on TriCor's sales than Solvay, for which a speedy approval of TriLipix is essential following consecutive quarters of poor results (see Belgium: 30 October 2008: Solvay's Q3 Profits Stumble on Stagnant Sales Growth).