Horizon Pharma slapped with securities lawsuit over patient assistance programs
Horizon Pharma ($HZNP) has already come under fire from federal prosecutors and payers for its patient assistance programs and questionable ties to specialty pharmacies. Now the company is being slapped with the inevitable securities lawsuit in a U.S. district court over related allegations.
New York-based law firm Gainey McKenna Egleston filed a suit in the U.S. District Court for the Southern District of New York on behalf of people who bought stock in Horizon between March 13, 2014, and Feb. 26, 2016. The firm claims that Horizon “made materially false and misleading statements to investors” and hid unsavory information about its patient assistance programs, it said in a statement. Lawyers are seeking damages on behalf of defendants.
Horizon set up its Prescriptions Made Easy (PME) program to “artificially inflate” prices for similar retail drugs, which negatively impacted sales, the firm said. As a result, Horizon released financial statements that “were materially false and misleading at all relevant times,” it added, opening up the company to more regulatory pushback.
Horizon’s actions took a toll on investors, the suit argues. “When the true details entered the market” about the company’s patient assistance programs, “the price of the stock dropped sharply and investors suffered damages,” the firm said. Gainey McKenna Egleston is calling for lead plaintiffs to join the case by May 9, 2016.
The class action suit is the latest chapter in Horizon’s saga over its patient assistance programs, which provide free drugs and copay coupons to help patients cover out-of-pocket costs. Earlier this month, the U.S. Attorney’s Office for the Southern District of New York said it would investigate Horizon’s financial support to patients and its ties to specialty pharmacies. The probe echoes one launched by the same office last year, which scrutinized Valeant’s ($VRX) patient assistance programs and its now-severed relationship with specialty pharmacy Philidor.
Payers are also coming down on Horizon for its financial support to patients. In November, PBM heavyweights Express Scripts ($ESRX) and CVS Health ($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 attempts to switch patients to lower-cost drugs, Express Scripts’ Senior VP for supply chain Everett Neville said at the time.
The same month, Express Scripts called off its relationship with specialty pharmacy Linden Care. The PBM found that Linden Care “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. Express Scripts’ move reflects a widening crackdown, as the PBM pledged that it would take a harder look at pharma’s relationships with specialty pharmacies after Valeant’s fallout with Philidor.
– read the statement