The suit is expected to impact Natco Pharma, Dr Reddy’s Labs, Cipla, and Zydus Lifesciences. All these companies had launched Revlimid during the second COVID-19 wave in September 2021
The 85-page long complaint alleges that a multifaceted, anti-competitive scheme was initiated by Celgene and BMS and later joined by Natco and Teva. This according to the plaintiff has delayed generic competition to Revlimid since at least 2019, and will continue to result in artificially high generic prices and artificially lower generic substitution until at least January 30, 2026 (Representative image)
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Pharma stocks like Natco Pharma, Cipla, and Dr Reddy’s Laboratories clocked some losses in the range of 1-4 percent in trade on November 14 after a Macquarie note suggested that an anti-competitive lawsuit being filed against anti-cancer and anti-myeloma drug Revlimid’s makers will open up a Pandora’s Box for other lawsuits.
Walgreens and Kroger Specialty Pharmacy filed a civil antitrust lawsuit against Celgene Corp, Bristol-Meyers Squibb (BMS), Natco Pharma, and Teva Pharmaceuticals regarding anti-cancer and anti-myeloma drug Revlimid, according to Macquire’s note on November 14, 2022. The answers from the defendants concerning the current lawsuit are due on January, 2023.
The 85-page long complaint alleges that a multifaceted, anti-competitive scheme was initiated by Celgene and BMS and later joined by Natco and Teva. This according to the plaintiff has delayed generic competition to Revlimid since at least 2019, and will continue to result in artificially high generic prices and artificially lower generic substitution until at least January 30, 2026.
According to the brokerage, this lawsuit opens a “Pandora’s Box” as other distributors, insurance companies could likely join forces with Walgreen. This is not just expected to impact Natco Pharma but also impact Dr Reddy’s Labs, Cipla, and Zydus Lifesciences. All these companies launched Revlimid in the second COVID-19 wave in September 2021.
Components of the lawsuit
The 85-page-long complaint outlines five tenets of an anti-competitive scheme by Celgene and BMS including:
1) Manipulation of REMS (risk evaluation and mitigation strategy) to refuse samples and API supplies to potential generic competitors,
2) Fraudulently obtained various patents from USPTO for Revlimid,
3) Filing of baseless citizen petitions with the US FDA
4) Serial patent infringement lawsuits against generic filers,
5) Settlement with generic companies using anti-competitive reverse payment agreement.
Plaintiff also allege that Natco and Teva agreed to reverse pavement settlement agreement limiting the generic volume in return for most favourable entry (MFE). Plaintiffs’ estimate that by executing volume limited settlement agreement, Natco/Teva would earn an additional $ 1.77 billion over the term of the contract vs. a normal generic entry.
Presently, Macquarie has an outperform rating for Dr Reddy’s Lab and Cipla with a target price of Rs 4,915 and Rs 1,265 with a potential upside of nearly 8.1 percent and 12.8 percent, respectively.
