35 States File Lawsuit Against Indivior and Reckitt Benckiser

- October 26th, 2016

Another pharmaceutical manufacturer is under scrutiny by US lawmakers: Reckitt Benckiser faces a lawsuit from some 35 states for its pricing of Suboxone.

Another pharmaceutical manufacturer is under scrutiny by US lawmakers: Reckitt Benckiser (LON:RB) faces a lawsuit from some 35 states for its pricing of Suboxone, a drug intended to combat opioid addiction. The complaint alleges that Reckitt “employed an unlawful, multi-pronged scheme … to preserve their monopoly profits from the sale of Suboxone.” Here’s what you need to know about this ongoing story.

The background

Reckitt’s exclusive license for Suboxone was set to expire in 2009. Just prior to this, the company developed an alternative form of the drug that dissolved under the tongue—one that would be protected by patent until 2022.
They made this Suboxone film significantly less expensive than the tablet version and eventually took their pill form off the market entirely. The company then filed safety concerns with the US FDA: Reckitt argued that the packaging around their film version made it harder for children to access the medication.

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The FDA ultimately rejected the claim, and in fact found that the pill form was safer than the film. But it took them two years to do so. In that time, physicians and patients came to favor the dissolvable film version: 85 percent of prescriptions were written for it, according to The Guardian.
Good news for Reckitt—but not for generic competitors who can not legally market a similar dissolving version of the drug until 2022.

The allegations

The lawsuit, which lists 36 plaintiffs, alleges Reckitt and its spin-off pharmaceutical company, Indivior (LON:INDV), fabricated the safety claims in order to delay the arrival of generic competitors on the market. If that’s true, it wouldn’t be the first time Reckitt has engaged in some questionable business strategies.
In 2008, internal memos came to light revealing an executive plan to use safety and patent issues as the means to retain market control. Two years later, the company admitted to manipulating Britain’s National Health Service to make physicians recommend one of its drugs over a generic equivalent. And in April 2016, it was discovered that Reckitt charged different prices for identical products, claiming that each of them treated unique pains.
Critics now see something similarly strange in the history of Suboxone. They question why, if Reckitt and Indivior truly believed there were safety issues with the bottled form of the drug, they continued to sell it in some parts of the world.
Indivior vehemently rejects these allegations.

Stock holds stable

In the wake of this lawsuit, Indivior’s stock has dropped slightly. Reckitt’s own has held fairly stable, even making minor gains in the weeks since the complaint was filed. It remains to be seen whether the legal action will scare off investors … or if the companies will sail through this scandal unscathed.
Don’t forget to follow us @INN_LifeScience for real-time news updates.
Securities Disclosure: I, Chelsea Pratt, hold no direct investment interest in any company mentioned in this article.

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