The U.S. Justice Department has slapped AstraZeneca ($AZN) for an alleged kickback scheme. The $7.9 million penalty is peanuts compared with Big Pharma's other marketing settlements--in fact, AstraZeneca's own settlement topped $500 million.
What's interesting about this one? It opens a window into pharma-payer relationships, in this case, an alleged quid pro quo for preferred formulary status.
AstraZeneca wanted Medco Health Solutions--now Express Scripts ($ESRX)--to give Nexium exclusive placement on several of its formularies. So, AZ agreed to "provide remuneration" to the pharmacy benefits manager Medco Health Solutions, in exchange for that "sole and exclusive" status for its blockbuster stomach drug. Nexium was competing in a crowded market, and over-the-counter versions of alternative remedies had come onto the scene, including Novartis' ($NVS) Prevacid 24HR.
What type of remuneration? At least some of it came in the form of discounts on other AstraZeneca products, the Justice Department says. The drugmaker cut its prices on Nexium's predecessor heartburn-fighter Prilosec, and the blood pressure drugs Toprol XL and Plendil. To the feds, those price cuts spelled kickbacks.
"We will continue to pursue pharmaceutical companies that pay kickbacks to pharmacy benefit managers," said Joyce Branda, acting assistant AG in the Justice Department's Civil Division. "Hidden financial agreements between drug manufacturers and pharmacy benefit managers can improperly influence which drugs are available to patients and the price paid for drugs."
With pricing pressure intensifying in the U.S.--particularly in drug classes with hot competition, such as hepatitis C and diabetes--drugmakers are wheeling and dealing.
How many are offering package deals for their meds? Diabetes in particular seems ripe for this sort of arrangement, because top companies in that field offer a range of diabetes drugs rather than just one or two. So drugmakers and PBMs should beware of the feds and their kickback definitions.
Meanwhile, AstraZeneca is still fighting allegations that it offered kickbacks for Seroquel formulary placements. Texas Attorney General Greg Abbott sued the drugmaker last year, claiming that company reps paid kickbacks to two state officials with decision-making power over drug coverage. The suit also covers alleged marketing violations.
AstraZeneca hasn't directly commented on the lawsuit but has said its marketing in Abbott's state has been kosher. "We believe that the company's actions in Texas have been lawful and ethical," the company said in October, when Abbott announced his lawsuit.
Other drugmakers have inked recent deals to wrap up Justice Department kickback allegations. Daiichi Sankyo agreed in January to pay $39 million to settle claims it offered kickbacks to doctors. And other companies are embroiled in marketing investigations, including Bristol-Myers Squibb ($BMY) and Otsuka, which face allegations of mismarketing their popular antipsychotic Abilify.
- read the DOJ release
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