Barr generic birth control pill delayed in wake of Warner Chilcott suit
WASHINGTON Barr Pharmaceuticals will delay the introduction of a low-priced, generic version of a Warner Chilcott birth control pill in exchange for $20 million, the Federal Trade Commission reported Thursday.
Under terms of the settlement, which will stay in effect for 10 years, Barr agreed not to enter into deals with name-brand pharmaceutical companies that would “unreasonably restrain competition,” and to inform the FTC about future arrangements that might prove objectionable.
The FTC had threatened Warner Chilcott with a preliminary injunction that would have forced the company to abandon development of a chewable form of Ovcon if it did not come to agreement with the agency.
The federal complaint was originally filed in Nov. 2005, and referred to a 2004 agreement between Barr and Warner Chilcott that allegedly would have delayed marketing of generic Ovcon until 2009. “As a result of the FTC’s actions, women taking Ovcon now have the choice to purchase a lower-cost generic version of the product,” the commission said in its release.
Warner Chilcott, which produces pharmaceuticals mainly for women’s health and dermatology, sued Barr in September after the generic pharma company submitted an application for a generic version of another contraceptive, known as Femcon FE. Warner Chilcott stated its patent doesn’t expire until 2019.
Barr’s application for FDA approval will be on hold for 30 months because of the lawsuit filing.
Walgreens drops CVS Caremark plans over thorny issue of Rx payment rates
In a dramatic impasse over the issue of prescription reimbursement rates, Walgreen Co. officials said today the chain will withdraw as a pharmacy provider from four prescription drug membership plans managed by rival CVS Caremark Corp.
Walgreens characterized the move as a reluctant and gradual response to “many months of talks over unreasonably low and below-market payment rates by CVS Caremark” for the four plans. Trent Taylor, president of the company’s Walgreens Health Services managed care division, expressed a desire “to continue talks with CVS Caremark so that we can once again serve patients under these plans.”
Patients affected include members of prescription benefit plans managed by CVS Caremark for ArcelorMittal, Johnson Controls, Inc., Progressive Casualty Insurance Co. and Wisconsin Education Association Trust. Most of the affected members live in Illinois, Indiana, Michigan, Ohio and Wisconsin.
“This is not where we wanted negotiations to lead,” said Taylor. “We’re sorry that our pharmacy patients and CVS Caremark’s clients are caught in the middle, and we’ll do all we can to ensure a smooth transition for our patients to another pharmacy. Meanwhile, we’ll continue to work on resolving this issue with CVS Caremark.”
Reached for comment, CVS offered a different view of the severed relationship. “CVS Caremark’s first priority has been, and continues to be, the well being of our clients/plan participants and access to their prescription benefit,” CVS spokeswoman Carolyn Castel told Drug Store News. “While we generally do not comment on client/retail network negotiations, we can say that we have repeatedly reached out to Walgreens to resolve the matter and regret that they have chosen to terminate their participation in the retail networks of the four clients targeted in the Midwest.”
The impasse over reimbursement rates comes as something of a surprise, given the connection between Caremark and its corporate parent. When CVS announced its plan to acquire the big pharmacy benefit manager last fall, some industry-watchers predicted the merger could lead to a more favorable climate for the often-thorny relationship between pharmacy retailers and PBMs. Some, however, warned that ownership of one of the nation’s largest PBMs by one of the two leading drug chains could shift the balance of power in favor of CVS alone, rather than for the chain pharmacy industry as a whole.
“Leaving a benefits plan is an extraordinary step for us, but it demonstrates how extraordinarily low our payments were from CVS Caremark,” Taylor asserted. “We can’t continue accepting reimbursement rates that are drastically below market, while offering patients needed special services such as 24-hour pharmacy access and drive-thru pharmacies.”
Walgreens recently received a new and improved rate from CVS Caremark for another plan it manages that also had been paying below market, but a company statement said CVS Caremark declined to provide the same solution for these four other plans.
“In an effort to be as open and transparent as possible in negotiations, we even offered to open our books directly to the employer groups and show them how much our pharmacies are paid by CVS Caremark,” said Taylor. “Unfortunately, CVS Caremark wouldn’t allow us to do that.”
Walgreens spokesman Michael Polzin said the decision to drop the plans “won’t have any material impact” on the company’s bottom line, despite the potential loss of those plan members as pharmacy customers. In total, he said, they represent “less than one percent” of the company’s revenue.
With Walgreens’ total sales now well in excess of $50 billion annually, it’s unclear how much top-line revenue could be affected. One percent of those sales equates to more than $500 million, although that figure also takes into account front-end revenues that may or may not be affected by the loss of the four plans at the prescription counter.
At press time, sources at CVS could not be reached for comment.
TPG Capital to acquire Axcan Pharma for $1.3 billion
MONT-SAINT-HILAIRE, Quebec Axcan Pharma, a specialty drug manufacturer focused on the treatment of gastrointestinal disorders has entered into an agreement under which it will be bought by TPG Capital and its affiliated in an all-cash transaction valued at about $1.3 billion.
The purchase price represents a 28 percent premium over the average trading price of Axcan’s common shares as of Wednesday. The board of directors of Axcan has unanimously approved the agreement and recommends that shareholders vote to accept the offer.
“We are pleased to invest in the leading pharmaceutical company specializing in the treatment of gastrointestinal illnesses. We look forward to supporting this excellent management team and workforce in growing the company’s global distribution capabilities and product line. Axcan will be an important addition to TPG Capital’s broad healthcare portfolio,” said Todd Sisitsky, a partner at TPG Capital.
Axcan anticipates that the transaction will be completed in the first quarter of 2008.