Pfizer Sues Johnson & Johnson Alleging Anticompetitive Practices

What Consumers Can’t See Will Hurt Them

If Pfizer is successful, it could discourage brand name companies from using deals with insurers to limit competition

Editor’s Note: Plan sponsors have no idea how the economics of our health care delivery system are birthed behind closed doors between third party intermediaries (carriers, PBM’s, etc) collaborating with one another………………….It’s all about the money and nothing about consumers………..

Pfizer sues Johnson & Johnson, alleging anticompetitive practices to maintain a drug monopoly

A legal brawl between two of the world’s largest drug companies could shape the future of a nascent market of copycat drugs that are intended to bring down the cost of the most advanced and expensive medicines.

Pfizer filed a lawsuit Wednesday against fellow pharmaceutical giant Johnson & Johnson for using “anticompetitive” tactics to quash its cheaper version of a powerful rheumatoid arthritis drug. Johnson & Johnson issued a statement saying the lawsuit had no merit.

If Pfizer is successful, it could discourage brand name companies from using deals with insurers to limit competition in the emerging biosimilar market. If Pfizer loses, the case could highlight a strategy those companies could continue to use to deter competition.

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Pfizer’s copycat version, Inflectra, was the second of a new generation of biosimilar drugs to be approved, after the Affordable Care Act paved a regulatory path.

Biosimilars — medicines that are highly similar to biologic drugs that battle cancer, multiple sclerosis, or high cholesterol — are seen as a modern-day version of generic drugs: a way to ensure that medicines at the cutting-edge of science would, after a limited period of time, see the price competition that has historically helped keep pharmaceutical spending in check over the long run.

But the lawsuit provides a window into company tactics that may make vibrant competition harder to achieve.

“This is the first lawsuit that is challenging anticompetitive behavior in the biologics industry, and that is very important because this is the wave of the future — this is where a lot of the innovation is taking place today,” said Michael Carrier, a law professor at Rutgers Law School. “It really is an uncharted path, in terms of what competition should look like going forward.”

For nearly two decades, Johnson & Johnson has been selling Remicade, an injectable biologic drug that is widely used against rheumatoid arthritis, Crohn’s disease and other inflammatory disorders. The drug last year generated $4.8 billion in U.S. sales.

After Pfizer won approval for its biosimilar version in April 2016, J&J attempted to “suppress that competition and deprive society of those benefits … to maintain its stranglehold,” according to the lawsuit, filed in U.S. District Court in Pennsylvania.

Remicade carries a sticker price of around $26,000 per year for typical uses, and Inflectra’s price is around $21,000. Those list prices do not reflect secret rebates that manufacturers provide.

The lawsuit alleges that J&J entered into anticompetitive, exclusionary contracts with insurers, hospitals and clinics that blocked 70 percent of commercially insured patients from having access to the drug.

Pfizer alleges that the contracts “coerce” insurers not to cover Inflectra by threatening to withhold the rebates that they would otherwise receive on the price of Remicade.

Pfizer said it offered discounts and rebates as much as 40 percent off Inflectra’s list price and promised many customers to keep the price lower than J&J’s drug. However, it noted that its competitor continues to have 96 percent of the market “even while maintaining prices far above competitive levels.”

“This is, in our view, a bellwether case — and what we are seeking is for J&J to refrain from using these sort of exclusionary contracting arrangements with insurers and providers,” said Laura Chenoweth, deputy general counsel at Pfizer. “Most importantly, we want to create an open playing field for biosimilars… to bring these drugs to a broader group of patients, at a better price.”

Johnson & Johnson dismissed the lawsuit as without merit and said that competition was working.

“We are effectively competing on value and price, and to date Pfizer has failed to demonstrate sufficient value to patients, providers, payers and employers,” Scott White, president of Janssen Biotech, a division of J&J, said in a statement. “Competition is bringing down the overall cost of Remicade, and will continue to bring down costs in the future.”

The lawsuit highlights the differences between the biosimilar and generic drug markets.

For years, brand name companies have fought, tooth and nail, to prevent generic companies from intruding into their markets by getting generic versions approved.

But once those drugs enter the market, Andrew Mulcahy, a health policy researcher at the RAND Corporation, said that typically, generic companies duke it out with one another on the price of their products. Meanwhile, the brand-name product typically stays at its original price (or gets more expensive) and simply loses market share.

In this case, the brand-name company appears to be trying to compete directly with the biosimilar competition.

One of the biggest effects of such behavior could be to limit future competition.

“Essentially, the brand manufacturer has just revealed itself willing to do whatever it takes to hold on to market share,” said Rena Conti, a health economist at the University of Chicago. “I view it as a shot across the bow.”

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