|Horizon CEO Timothy Walbert|
Horizon Pharma ($HZNP) is the latest drugmaker to get some unwanted attention for its patient assistance programs and the specialty pharmacies that administer them.
The U.S. Attorney's Office for the Southern District of New York is probing Horizon's financial support to patients and its alleged ties to specialty pharmacies, the company disclosed Monday. Last year, the same office, headed by Preet Bharara, launched an investigation into Valeant's ($VRX) patient assistance programs and its questionable relationship with its now-discarded specialty pharmacy Philidor.
In an SEC filing Monday, Horizon said that federal prosecutors in November asked for documents and information related to its patient assistance programs, which provide free drugs and copay coupons to help patients cover out-of-pocket costs. The company can't "predict how long this investigation will continue or its outcome," but it "may incur significant costs" regardless of the end result, Horizon said in its filing.
The federal investigation will also look into Horizon's relationships with specialty pharmacies, CEO Tim Walbert said Monday on a conference call with analysts. In November, PBM giant Express Scripts ($ESRX) called it quits with Woodbury, NY-based pharmacy Linden Care after finding that it "predominantly dispensed Horizon prescription drugs and did not fulfill key components of our pharmacy network agreements," Express Scripts spokesman Brian Henry told FiercePharma at the time.
Horizon is cooperating with the latest investigation, and there are no specific allegations against the company yet, Walbert said earlier this week. The company maintains a robust compliance program for its patient assistance programs and "based on these audits we have no plans to modify our programs," Walbert said.
Still, the federal investigation could force Horizon to limit its patient assistance programs moving forward, which could take a bite out of sales, Citi analyst Liav Abraham told The Wall Street Journal. Shares of the Dublin-based drugmaker fell 13.3% to $17.16 through the close of trading on Monday.
Federal prosecutors are not the only ones pushing back at Horizon's patient assistance programs. In November, Express Scripts and fellow PBM CVS Health ($CVS) stopped paying for the company's top-selling pain drugs Vimovo and Duexis because cheaper alternatives to the meds were available. Horizon's patient assistance programs try to get around the PBM's efforts to get patients to switch to lower-cost drugs, Express Scripts' Senior VP for supply chain Everett Neville said at the time.
Express Scripts in November also sued Horizon for an alleged breach of contract. The PBM said that the company did not fork over $140 million in back payments and was looking to recover the funds.
Horizon's problems echo those faced by beleaguered Valeant. In October, the company revealed that it got subpoenas from Bharara's office and the U.S. attorney's office for the District of Massachusetts for documents that shed light on its financial support to patients, drug distribution and pricing decisions.
Valeant the same month cut ties with specialty pharmacy Philidor after reports surfaced that Philidor changed doctors' orders to get more reimbursement from insurers. Express Scripts also made moves to boot the pharmacy from its network during the fallout.