rebate wall

February 19, 2020

Consumer Groups Raise Rebate Wall Concerns With Regards to AbbVie/Allergan Merger

On February 18, 2020, a group of unions, consumer groups, and public interest organizations filed a letter with the U.S. Federal Trade Commission (“FTC”) raising concerns that the divestiture of Allergan plc’s (“Allergan”) pipeline drug, brazikumab, will not succeed unless the FTC addresses AbbVie’s use of rebate walls.

Consumer Group Concerns Regarding Rebate Walls and the Proposed Divestiture

The letter expresses concerns that the proposed divestiture to AstraZeneca of Allergan’s brazikumab, a drug in development, is inadequate to address the clear anticompetitive effects of the AbbVie/Allergan merger. The letter makes the following points:

September 12, 2019

Coalition of Unions and Consumer Groups Oppose AbbVie/Allergan Merger Based on Use of Rebate Walls

by Doyle, Barlow & Mazard PLLC

On September 12, 2019, a coalition of unions, consumer groups, and public interest organizations filed a letter with the U.S. Federal Trade Commission (“FTC”) opposing AbbVie Inc.’s (“AbbVie”) acquisition of Allergan plc (“Allergan”).

Coalition Opposing the Merger

The coalition includes Families USA, Public Citizen, U.S. PIRG Education Fund, Service Employees International Union, American Federation of State, County, and Municipal Employees, UNITE HERE, Consumer Action, American Federation of Teachers, Alliance for Retired Americans, American Family Voices, Doctors for America, End AIDS Now, Prescription Justice, Social Security Works, the Other 98, Treatment Action Group, and NextGen California. It is asking the FTC to conduct a thorough investigation and to block the merger if the facts support it and a remedy cannot be devised to restore competition. The coalition highlights the competitive problems arising from continued consolidation in the pharmaceutical industry and requests that the FTC include in its investigation ongoing anticompetitive conduct by the parties, such as the use of rebate walls, which will have an even more profound anticompetitive effect if this merger is consolidated, as well as past abuse of the patent system.

March 26, 2019

Allegeran Wins Motion to Dismiss Regarding Questionable Rebate Practices

by Doyle, Barlow & Mazard PLLC

On March 22, 2019, Judge John Michael Vazquez of the United States District Court for the District of New Jersey granted Allergan’s motion to dismiss Shire’s antitrust complaint that Allergan monopolized the Medicare Part D dry eye disease (“DED”) treatment market through its contracting practices with insurers including rebates based on a bundled portfolio of drugs and an exclusive dealing contract whereby a Medicare Part D plan was contractually barred from offering any other DED drug on its formulary. Shire US, Inc. v. Allergan, Inc., No. 17-cv-7716 (D.N.J. Mar. 22, 2019).

Background

On October 2, 2017, Shire sued Allergan for its bundling and exclusive dealing arrangements with Medicare Part D plans that deny patients access to Xiidra® – Shire’s best-in-class, breakthrough drug to treat DED.

January 12, 2019

Members of Congress Want an Antitrust Investigation into Bristol-Myers Squibb’s Acquisition of Celgene

by Doyle, Barlow & Mazard PLLC

On January 11, 2019, Congressman Peter Welch and Francis Rooney, members of Congress, wrote a letter to the Federal Trade Commission (“FTC”), urging the Commission to investigate Bristol-Myers Squibb’s (“BMS”) acquisition of Celgene.

The letter asks the FTC to examine how the transaction may harm competition with respect to horizontal overlaps and even complementary drugs. Specifically, the letter points out that the acquisition allows BMS to increase its drug portfolio and leverage over pharmacy benefit managers (“PBMs”) when negotiating preferred drug placement on formularies and bundled discounts that can create “rebate walls”.

The transaction gives the FTC an opportunity to investigate a questionable contracting practice in the pharmaceutical drug industry known as a “rebate wall” or “rebate trap”. Payors such as PBMs and health insurers obtain rebates on prescription drugs from pharmaceutical manufacturers that have actually inflated the price of drugs and stifled the ability of rival drug manufacturers to effectively compete. This practice is recognized by both the administration and industry players as anticompetitive. Department of Health and Human Services Secretary Alex Azar has noted that rebate walls can prevent competition and new entrants into the system. Moreover, major drug manufacturers such as Pfizer and Shire have filed antitrust suits challenging rebate walls as antitrust violations. In theory, rebates could have a positive impact on the prescription drug market if they led to lower prices and benefit consumers. But, in practice, this is simply not the case. Rebate walls distort the workings of the free market, result in higher drug prices, and reduce patients’ access to affordable branded drugs.

August 20, 2018

Pfizer’s Suit Regarding J&J’s Rebate Trap Survives

by Doyle, Barlow & Mazard PLLC

On August 10, 2018, the Eastern District of Pennsylvania denied J&J’s motion to dismiss Pfizer’s antitrust action involving infliximab products.

Background on Pfizer/J&J

In September 2017, Pfizer filed an antitrust lawsuit under Sections 1 and 2 of Sherman Act alleging J&J engaged in exclusionary anticompetitive practices to keep Pfizer out of the market for infliximab products.