Brazilian authorities raid Alexion office in another sales-practices probe

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Brazilian authorities are investigating whether Alexion subsidized lawsuits for patients to gain access to one of its drugs through the country's national health system.

Alexion’s sales practices are under the lens again. Just four months after concluding its top brass inappropriately pressured staff to pad Soliris sales in the U.S., Brazilian authorities raided the company’s Sao Paulo offices as part of an investigation into its marketing there.

Brazil’s police are probing whether the Connecticut-based biotech, helped by Brazilian patient association Associacao dos Familiares, Amigos e Portadores de Doenças Graves (AFAG), subsidized lawsuits for patients to gain access to Alexion's Soliris through Brazil’s national health system, according to a search warrant request seen by Bloomberg.

AFAG, to which Alexion has said it gives financial support, was also searched.

Related: Alexion says its top brass inappropriately pressed staff to pad Soliris sales

Law enforcement officials have turned up evidence showing that some of the lawsuits—which number more than 900 in the last six years—were fraudulent and used fake diagnoses to help reel in patients. Through those lawsuits, Alexion drummed up $400 million in sales from the Brazilian government in that time period, the warrant request says.

“We are aware that patients in Brazil obtain access to Soliris through the judicial system since this is one of the few ways, and often the only way, that citizens in Brazil with a devastating disease can have access to available therapies and healthcare services. Patients are exercising their constitutional right and they bring forth the legal proceedings in their own names in coordination with the patient advocacy organization," a company spokeswoman said in a statement, adding that Alexion would continue to fully cooperate with authorities.

According to Alexion’s Q1 SEC filing, the company received a Securities and Exchange Commission subpoena in May 2015 requesting info on the company’s “grant-making activities and compliance with” the Foreign Corrupt Practices Act. Investigations have “focused on operations in various countries,” with Brazil—along with Japan, Colombia, Russia and Turkey—among them.

"Alexion provides support to the patient association in Brazil in the form of unrestricted educational grants and in accordance with local laws and regulations and industry code," the spokeswoman said.

Related: Alexion brings on former Baxalta chief Hantson to fill vacant CEO spot

The raid follows the January conclusion of a separate internal investigation that examined sales practices surrounding its lead med. That probe found that, in order to hit financial targets, Alexion’s higher-ups pressed staffers to get customers to place Soliris orders earlier than they would have otherwise—and the company’s then-CEO David Hallal and CFO Vikas Sinha exited during the investigation.

The Brazil issues will now be new chief exec Ludwig Hantson’s to handle, and they’re not insignificant. On Alexion’s Q1 call, the company noted that about 10% of total sales for Soliris come from Latin America, with about 20% to 30% of those exposed to Brazil and Argentina, Jefferies analyst Eun Yang wrote in a Monday note to clients.

Hantson, meanwhile, made a good first impression among analysts and investors on Alexion’s Q1 call late last month. After wondering whether Hantson, former skipper of Baxter spinoff Baxalta, would go “from Big (Pharma) to worse,” Leerink Partners analyst Geoffrey Porges wrote to clients that Hantson “performed creditably on the call, showing command of the products, markets, financial results and competitive landscape for the company’s products.”

Editor's note: This story has been updated to include comments from an Alexion spokeswoman.