United States: The Government's Generic Price-Fixing Investigation Targets Allergan's Actavis Unit

This is our fourth post on the DOJ's expanding investigation into possible price fixing by generic drug manufacturers. (Click here, here, and here to read our prior posts.) Since our last update, the DOJ has subpoenaed Allergan Plc's Actavis unit. In its August 6, 2015, 8-K, Allergan disclosed that it had received a subpoena from the DOJ "seeking information relating to the marketing and pricing of certain of the Company's generic products and communications with competitors about such products." As the fourth largest distributor of pharmaceuticals in the U.S., Allergan is the largest company that has been targeted by the DOJ.

Although Allergan's 8K does not identify the particular products that the DOJ is investigating, there is reason to believe that the DOJ may be focused on digoxin and doxycycline. Like the other generic manufacturers who have been subpoenaed—Impax Laboratories, Lannett Company, and Par Pharmaceutical Companies, Inc.—Actavis has manufactured digoxin. Actavis has also supplied doxycyline, which may be significant because Par had disclosed that its DOJ subpoena sought communications related to doxycycline.

In its 8-K, Allergan also stated that it had received a subpoena from the Office of Inspector General ("OIG") of the Department of Health and Human Services seeking documents relating to Average Manufacturer Price ("AMP") and Best Price calculations for several of its products. As we have previously reported, the OIG is investigating the extent to which generic manufacturers' AMPs increased by more than the statutory inflation factor under section 1927(c)(2) of the Social Security Act.

In connection with this investigation, Senator Bernard Sanders and Representative Elijah E. Cummings recently introduced the Medicaid Generic Drug Price Fairness Act into Congress. This new legislation would require generic manufacturers to pay a rebate to Medicaid when their prices outpace inflation. This requirement currently only applies to brand-name manufacturers.

We will report back with further updates.

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