"Forced switch" maneuver spurs lawsuit against drugmaker
The New York State Attorney General Eric T. Schneiderman Monday filed suit against the makers of the Alzheimer's drug Namenda, accusing the company of violating anti-trust laws. The suit follows a CBS News investigation in August into why a version of the drug was being taken off the market.
The Namenda IR version of the medication is due to go generic next year. But before that less expensive generic product becomes available, Namenda IR is scheduled to be withdrawn from the market.
Instead, doctors are being asked to transition patients to Namenda XR, a once daily pill which has additional patent protection and is unlikely to go generic for years.
It's a strategy called "forced switch."
One of the patients affected by the maneuver is Mike Hitch, 54, who has early onset dementia and takes Namenda IR twice a day.
"I may have dementia and Alzheimer's and all that, but they're gonna make millions, billions of dollars off of it and get everybody switched to their XR version before they can even get hold of a generic," Hitch said.
Namenda generates about $1.5 billion in annual sales. So loss of Namenda's patent protection could translate to more than a billion dollars in lost revenue a year.
Attorney General Schneiderman's lawsuit seeks to block Namenda's maker, Forest Laboratories, and its parent company, Actavis, from withdrawing the drug, calling the strategy illegal and charging: "forced switch is an effort to game the regulatory system and manipulate patients and physicians through business practices that...impede competition from cheaper generic drugs and perpetuate Defendants' monopoly profits."
"This is hundreds of millions of dollars that will either be paid by Alzheimer's patients or by all of us because 70 percent of these patients rely on Medicare or Medicaid," Schneiderman said in an interview with CBS News.
CBS News reached out to Actavis late Monday. The company said it does not comment on pending litigation.
Forest Laboratories CEO Brent Saunders, who is now CEO of Actavis, discussed Namenda during a Forest Laboratories conference call in January. CBS News obtained a recording of the call.
In the recording, Saunders says: "...we believe that by potentially doing a forced switch, we will hold on to a large share of our base users."
He also addressed the challenges generic companies face following a forced switch.
Saunders says: "It's very difficult for the generics, then, to reverse commute back, at least with the existing RXs. They don't have the sales force, they don't have the capabilities... (to go do that. Doesn't mean that it can't happen, it just becomes very difficult) and is an obstacle that will allow us to, I think, again, go into a slow decline versus a complete cliff."
When generic companies compete, the price of a drug usually drops 70 to 80 percent. Attorney General Schneiderman says the tactics of the company threaten access to a cheaper medication for this especially vulnerable population.