Reckitt Benckiser faces inquiry over move to block heroin substitutes
Reckitt Benckiser has been referred to competition authorities in the US over its controversial attempts to pressure medicine regulators into blocking the introduction of cheap, generic versions of its lucrative heroin substitute drug.
Reckitt argued that a study showed such tablets presented a risk to young children who were getting hold of them and swallowing them accidentally. But the Food and Drug Administration (FDA) has thrown out a petition by the company seeking a series of regulatory changes around the marketing of opioid
In addition, the FDA has given two generic drug makers, Amneal and Actavis, the green light to market cut-price, copycat pills against Reckitt's Suboxone
. Actavis said it "intends to begin shipping the product immediately".
Reckitt's exclusive rights to market Suboxone tablets in the US expired just over two years ago and its investors have been told to brace themselves for a substantial hit to profits once competition arrives.
But in September last year the outlook seemed to change abruptly after Reckitt said it had received alarming new evidence that the pills presented a serious danger to young children who come into in contact with addicts. As a result, the company said it intended to voluntarily withdraw its Suboxone tablets from sale in the US and would seek to move recovering addicts on to its alternative version of Suboxone an under-the-tongue strip rather than a pill which it insisted was demonstrably less likely to fall into the hands of toddlers. In addition it called, via a so-called citizen petition, for the FDA to ban any future generic versions of the pill.
The move immediately drew speculation that Reckitt was acting more out of a desire to protect profits than out of a concern over child safety a suggestion the company strongly denied, then and now. Reckitt's strip version of Suboxone has patent protection until 2023.
Shares in Reckitt fell 135p to 4381p on Monday after the company confirmed the FDA's decision, describing it as "disappointing".
Earlier this month the group revealed that 21% of its operating profits last year stemmed from its pharmaceuticals division a legacy business unit dominated by the sale of heroin treatments, mainly Suboxone, to Medicaid-funded programmes in the US.
Reckitt best known for its household goods brands such as Cillit Bang, Dettol, Vanish and Finish has repeatedly warned investors to expect a fall of up to 80% in sales and profits from the tablets when a generic version reaches the market.
In a highly critical 17-page letter rejecting Reckitt's citizen petition (pdf), the FDA dismissed the group's new evidence and called into question its motives, even referring the matter to investigators at the Federal Trade Commission.
"The timing of Reckitt's September 2012 announcement that it would discontinue marketing of the tablet product because of paediatric exposure issues, given its close alignment with the period in which generic competition for this product was expected to begin, cannot be ignored," wrote Janet Woodcock, director of the FDA's Centre for Drug Evaluation and Research.
Of Reckitt's plans to voluntarily withdraw its Suboxone pills at the end of April, she concluded this was "not necessary for reasons of safety". Woodcock also noted that the company's claims of a serious risk to child safety appeared to be undermined by its decision to delay the termination of Suboxone pill marketing efforts.
"Commentators claim the petition is part of a pattern of anti-competitive behaviour
intended to delay approval of generic versions," Woodcock wrote. "The FDA has referred this matter to the FTC, which has the administrative tools and the expertise to investigate and address anti-competitive business practices."
It is not the first time that anti-competitive concerns have been raised about Reckitt's healthcare activities. In an unrelated case Reckitt was fined £10.2m by the Office of Fair Trading in the UK after it was found to have engaged in anti-competitive behaviour following the expiry of a patent on its Gaviscon heartburn treatment. The penalty followed whistleblower revelations which helped prove Reckitt had hoped to prosper by removing Gaviscon Original Liquid from a list of prescription drugs
available to NHS patients shortly after the expiry of a patent.
This delisting, the OFT concluded, was designed to make it harder for chemists to identify cheaper generic alternatives and to boost sales of Reckitt's new variant Gaviscon Advance Liquid. The Advance Liquid product was in patent and therefore not subject to generic competition.
After initial denials, Reckitt did admit abusing its dominant position in the market for heartburn medicines. However it has not settled a parallel £90m civil claim brought by the Department of Health and filed almost two years ago.
The Guardian, Monday 25 February 2013