Allergan In $750-Million Settlement Over Alzheimer’s Drug Namenda
Allergan and its subsidiaries, Forest Laboratories LLC, Forest Laboratories Inc., and Forest Laboratories Holdings, have reached a settlement of $750 million with a plaintiff class of direct purchasers of Namenda (memantine), a drug to treat moderate-to-severe dementia of Alzheimer’s disease. The settlement would conclude the previously disclosed direct purchaser class-action litigation in the US District Court for the Southern District of New York.
In 2014, Forest became a wholly owned subsidiary of Actavis, which thereafter changed its corporate name to Allergan. In 2014, the State of New York filed a lawsuit in the U.S. District Court for the Southern District of New York alleging that Forest was acting to prevent or delay generic competition to Namenda in violation of federal and New York antitrust laws and committed other fraudulent acts in connection with its commercial plans for Namenda XR, an extended release form of the drug, according to Allergan’s 2018 annual filing. The district court granted the state’s motion for a preliminary injunction, which was later affirmed by the Court of Appeals for the Second Circuit. The parties in that case then reached a settlement to resolve the dispute. Following the conclusion of the case, by New York Attorney General Matter, putative class actions were filed on behalf of direct and indirect purchasers in the same federal court. The class-action complaints make claims similar to those asserted by the New York Attorney General and also included claims that Namenda patent-litigation settlements between a company subsidiary and generic companies also violated antitrust laws.
Under the agreement, Forest will pay a total of $750 million to the direct purchaser class, subject to finalization of the settlement agreement and court approval. The company says it will take a pre-tax GAAP charge of $750 million to its third quarter 2019 earnings.
Allergan says the settlement makes no admission of wrongdoing on the part of the company and resolves the litigation that was scheduled to go to trial this month (October 2019).