Actavis completed its buyout of Ireland's Warner Chilcott more than a year ago and is now trying to rid itself of some nasty legal entanglements that it picked up in the $8.5 billion deal. The drugmaker says it has been meeting with the Justice Department looking for a way to put to rest an investigation into allegations Warner Chilcott essentially bribed doctors into prescribing some of its meds.
|Actavis CEO Brent Saunders|
Actavis ($ACT) reported in its quarterly financial filing with the SEC that it had met with people at DOJ to discuss the "potential resolution of, its investigation." It acknowledged that in 2012 the DOJ sent out subpoenas to current and former Warner Chilcott employees and "certain third parties" about its sales and marketing practices. That included wanting info on "payments to people who are in a position to recommend drugs," among other things. It says the allegations involve some of its current products.
The filing also references whistle-blower lawsuits by former employees who made a long list of allegations about marketing no-nos Warner was supposed to have engaged in before the buyout. One of those lawsuits, filed by two employees in 2013, claims the drugmaker flouted the rules in marketing 9 of its drugs, including the bone treatments Actonel and Atelvia, the colitis drug Asacol, and the acne drug Doryx. The suits claim the drugmaker wined and dined doctors at speaker events that sometimes didn't even have speakers and threatened to fire any sales reps who balked the heavy-handed tactics.
To get better results from its practices, the suit claims the drugmaker actually hired young and inexperienced sales reps who wouldn't know how things were supposed to go and even got rid of some experienced reps that came on board when it bought Procter & Gamble Pharmaceuticals because top execs figured they wouldn't want to engage in some of the tactics.
Actavis said in its filing that the government has not joined the suits by the former employees, although it still could. It also said that it has made an analysis of what the legal matter could set it back financially and set money aside. It didn't disclose what that amount was but deeper in the filing indicated it was part of the $375 million it has accrued for these kinds of things.
Actavis managed to dodge another legal bullet tied to marketing this week. It is among four makers of high-powered painkillers dismissed from a lawsuit by the city of Chicago accusing them of over promising on the benefits of their opioid meds and soft pedaling the risks of addiction and overdose. Also dismissed were Teva ($TEVA), Johnson & Johnson ($JNJ), and Endo Health Solutions ($ENDP). The judge said the accusations against the four weren't specific enough. Purdue Pharma remains on the line.