Class Action Claims Patients Overpaid for Dementia-Treating Namenda IR Due to Drugmaker’s Anticompetitive ‘Scheme’

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A proposed class action lawsuit alleges Forest Laboratories, LLC has engaged in an “anticompetitive scheme” through which the pharmaceutical company has been able to charge inflated prices for dementia drug Namenda IR.

The case out of New York alleges Forest Laboratories has “gamed the system” by delaying the availability of lower-priced, generic forms of Namenda IR through “sham litigations” and a “product hop” that replaced the medication with a new drug that was essentially the same. The result, the complaint alleges, is that consumers, including Alzheimer’s patients, have been significantly overcharged for a branded product that’s been artificially positioned as the only option on the market.

Namenda IR, Forest Laboratories’ blockbuster moderate-to-severe dementia treatment, was first available in the U.S. market in 2004, the lawsuit begins. In 2007, when others began applying for approval of generic alternatives to the drug, Forest allegedly filed patent infringement lawsuits against 14 generic competitors to automatically prevent the drugs from getting an FDA green light for a 30-month period. According to the complaint, Forest initiated the batch of lawsuits in order to avoid the “rapid and steep decline in sales and profits” that typically accompanies the availability of cheaper generic alternatives to a brand-name drug.

The case alleges that Forest, apparently aware that its lawsuits were weak, began settling litigation with generic competitors in 2010, about a year before the 30-month stays were due to expire. As part of the agreements, the suit says, the defendant’s competitors accepted an undisclosed sum of money from Forest in exchange for delaying the market entrance of their respective generic alternatives to Namenda IR.

The lawsuit further alleges that “acceleration clauses” included in the agreements between Forest and its 14 competitors stipulated a five-year delay period during which the companies could not enter the market unless another company launched a generic Namenda IR product. The case argues, however, that such clauses were anticompetitive in nature given the companies would not have agreed to the five-year delay terms unless they were assured that another generic competitor could similarly not bring a drug to market earlier. Although several generic alternatives received final FDA approval as early as 2010, no generic was launched until July 11, 2015, which caused patients to overpay for Namenda IR for many years, the case says.

Further still, the lawsuit claims that Forest hindered the availability of cheaper Namenda IR alternatives even more by initiating what’s described as a “product hop.” According to the suit, the tactic involves a brand-name company releasing a new product “with little or no consequential value” in an effort to switch patients over to the new drug that, because of its novelty, is protected from generic competition. Forest allegedly accomplished such with the launch of its extended-release Namenda XR product, which the case claims is essentially the same as Namenda IR but with a different dosage amount. Though the two drugs contain the same active ingredient and produce the same therapeutic effects, Namenda XR was designed to be taken once a day instead of twice, the suit explains. After the release of the “new” drug, Forest allegedly initiated a “hard switch” by communicating its intention to discontinue Namenda IR, effectively forcing patients, most of whom are elderly, into switching medications.

Importantly, Forest made clear that generic memantine tablets (Namenda IR) were not AB-rated equivalents to Namenda XR, meaning a pharmacist could not substitute lower-priced generic memantine for a Namenda XR prescription, the suit says. Unfortunately for Forest, however, the company’s “forced switch” tactic came to the attention of New York’s attorney general, whose office filed a complaint that sought to prevent the drugmaker from maintaining its monopoly at the expense of “vulnerable, elderly patients.” While an injunction against Forest and parent company Actavis was granted in December 2014 and affirmed by an appeals court in May 2015, the defendant’s anticompetitive efforts “have been substantially and irreversibly accomplished,” the lawsuit claims, as many patients who had already converted to Namenda XR were “likely to stay converted.”

The case charges that Forest’s actions have damaged proposed class members—certain indirect purchasers of Namenda IR 5 or 10 mg tablets or Namenda XR capsules—to the tune of over $2 billion by causing buyers to pay inflated prices for the medication.