Shortly after taking a beating over its Restasis tribal patent maneuver, Allergan is facing allegations that it betrayed shareholder interests by colluding to fix prices with other generic companies and keeping investors in the dark.
Filed by TIAA-CREF funds that lost money in their Allergan investments, the new lawsuit alleges that between Oct. 29, 2013, and Nov. 3, 2016, Allergan and top executives colluded with other generic companies and misled investors about the company's price hikes. When news of an industrywide investigation into price fixing went public, the company's shares took a hit.
"There is no non-collusive explanation for these sudden, synchronized price increases—there was no supply shortage, production problem, or sudden increase in demand for these drugs during this period," the lawsuit says.
The investor lawsuit, which echoes claims made in another investor action, contends that company officials met with executives from other firms at industry conferences and dinners and communicated over the telephone about pricing. It names former Actavis CEO Paul Bisaro, current Allergan helmsman Brent Saunders and CFO Maria Teresa Hilado, plus former Teva generics CEO Siggy Olafsson and many other individuals. Allergan's share price has fallen by nearly half since July 2015.
Hilado and Olafsson each decided to retire over the past year, their companies individually announced. Allergan agreed to sell its generics business to Teva in July 2015 and the deal closed in August 2016, but the lawsuit includes activities dating back to October 2013.
An Allergan spokesperson didn't immediately respond to a request for comment on the suit.
Separately, the drugmaker faces similar claims about breaches of fiduciary duties in a suit filed by ex-employees who lost value in their retirement funds. Former employee Andrew Ormond started that effort in New Jersey federal court back in March.
The new allegations come at a tough time for Allergan as it recently made the highly unpopular move of transferring Restasis patents to the Saint Regis Mohawk Tribe in an attempt to defend against an inter partes review at the U.S. Patent and Trademark Office. Despite the strategy, which has spawned a Congressional inquiry, the company lost a separate patent trial that invalidated its protections for the blockbuster eye med. Allergan has appealed that loss.
The TIAA-CREF action also follows a move by dozens of attorneys general to expand the generic price fixing lawsuit to include 18 companies and two individuals: Mylan president Rajiv Malik and Emcure Pharmaceuticals CEO Satish Mehta. Connecticut's attorney general George Jepsen is leading the effort and said the suit could expand even further. That filing doesn't name Allergan, but does name Actavis units that were previously part of the drugmaker.
Mylan responded that it has "deep faith" in Malik and "stands behind him fully."