In last-minute deal, Allergan forks over a hefty $300M to settle pay-for-delay dispute

Allergan headquarters
Allergan previously paid $125 million as part of a federal plea deal to close bribery charges against Warner Chilcott. (Allergan)

With AbbVie and Allergan almost ready to wrap up their $63 billion megamerger, both drugmakers are looking to clear any outstanding accounts before the deal closes. And Allergan just agreed to fork over $300 million to resolve one of them.

On the eve of a Monday trial, the company agreed to settle pay-for-delay claims against two of its businesses—Warner Chilcott and Watson Pharmaceuticals. For $300 million and no admission of wrongdoing, Allergan avoids a public trial and a potentially protracted legal wrangle.

Filed by purchasers of Loestrin 24 Fe and Minastrin 24 Fe, the antitrust suits claimed Warner paid off Watson and another generics maker, Lupin Pharmaceuticals, to delay launching cheaper copycats of those two contraceptive pills.

Warner Chilcott also allegedly used a false patent as a basis for "sham lawsuits" against generic manufacturers of Loestrin 24 and switched the market from Loestrin to Minastrin––"a nearly identical product," according to the lawsuit––in an effort to get doctors to prescribe the newer drug. 

In May, Lupin agreed to settle its end of the suit, reaching a $1 million deal with the plaintiffs to bow out.

RELATED: Warner Chilcott's marketing probe snared a doctor, and now she could go to prison

Warner Chilcott's pay-for-delay suit is only the most recent headache the business has given Allergan since its $8.5 billion acquisition in 2013. Watson, for its part, was a subsidiary of generics maker Actavis when it agreed to a reverse merger with Allergan in 2015.

The same year, Allergan paid out $125 million as part of a plea deal tied to a bribery investigation Warner Chilcott and its former president, W. Carl Reichel, faced prior to the buyout. As part of the settlement, Warner Chilcott pleaded guilty to one felony charge of healthcare fraud and a $22.94 million fine. It also paid $91.5 million to the feds and $10.6 million to states to settle civil charges.

The criminal charge was based on allegations that, from 2009 to 2013, managers had employees file "canned" medical justification forms to get Medicare and Medicaid to pay for prescriptions of Atelvia, which were required because it cost more than other osteoporosis drugs.

Reichel was accused of directing his sales team to treat healthcare providers to free dinners—with no formal educational agenda—and ask attendees to boost their prescription numbers. Some reps paid for doctors' family barbecues and holiday parties, a federal indictment said.

Reichel was later found not guilty on those charges in June 2016, but a doctor involved in the case, Rita Luthra, M.D., was convicted on obstruction of justice claims in May 2018. 

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