Abbvie

An investor in AbbVie Inc. has sued the pharmaceutical company in Delaware Chancery Court to investigate an alleged kickback scheme that boosted sales of its popular immunosuppressant Humira and potentially exposed the company to more than $6 billion in legal liability.

The 28-page filing, filed May 3, claimed that senior officers and directors had allowed the firm to illegally promote Humira, which is used to treat rheumatoid arthritis, Crohn's disease and other inflammatory conditions, by offering doctors benefits in exchange for prescribing the drug.

According to the complaint, Humira executives instituted a system of providing incentives to doctors in exchange for prescribing the medication, and created “ambassador ” positions to interact directly with patients and keep them on the drug, which has been linked to increased risks of fatal infections and certain cancers.

Meanwhile, the company's management authorized more than $10 billion in stock buybacks that benefited only company insiders, at a time when AbbVie's business had taken a downturn, lawyers for plaintiff Lori Geare said in the filing.

“ There is a credible basis to believe that directors and senior officers at AbbVie may have breached their fiduciary duties by ignoring or failing to oversee, monitor, or mediate violations of law in the marketing of Humira,” attorneys from Grant & Eisenhofer and the Paskowitz Law Firm wrote.

North Chicago, Illinois-based AbbVie's press office did not immediately respond Monday to a call seeking comment on the lawsuit.

According to the complaint, executive compensation at AbbVie was tied “directly” to sales of Humira, which generated $19.9 billion in revenue last year, and prompted management to “focus disproportionately” on promoting the product.

The attorneys said that AbbVie provided doctors “traditional” kickbacks, such as cash, meals and other gifts, as well as “more sophisticated forms” that included offers of marketing assistance and free insurance processing services. AbbVie, they said, also offered product “ambassadors” with nursing backgrounds, who were trained to visit patients' homes and downplay the risks of Humira in order to keep them on the drug.

The nurses also helped doctor's offices with handling insurance authorizations and claim processing, so long as physicians continued to proscribe the drug, the complaint said.

The alleged scheme caught the attention of authorities in 2015, when a whistleblower filed a false claims case against AbbVie in California federal court. Since then, the state of California has launched an investigation into AbbVie's marketing practices for Humira, and the California Department of Insurance in 2018 sued the company, alleging that it had defrauded the state to the tune of $1.2 billion.

According to the complaint, the AbbVie board failed in its duty to monitor how its drug was being marketed, and instead allowed the company to proceed with an aggressive stock buyback program, which resulted in 109 million shares being repurchased at a price of $10.7 billion last year.

At the time, the filing said, AbbVie's executives and directors knew that the company was experiencing its “worst quarter ever,” amid a slowdown in Humira sales and growing competition in Europe. Just weeks after the buybacks closed, AbbVie lowered its European sales forecasts and at the end of October, its stock dropped to $77.85 per share from the $103 buyback price, representing a $1.8 billion decline.

Attorneys said the stock, which is currently trading around $81 per share, has yet to significantly rebound.

“These events raise a reasonable suspicion that the buyback was undertaken to support the stock price so that the executives might benefit (in 2018 or in the long term) and/or to mask weakness in AbbVie's competitive position,” the complaint said. “This matter plainly warrants investigation, as to how the buyback was approved and upon what information, so that the stockholders may be protected.”

Geare is represented by Michael J. Barry, Christine Mackintosh and Rebecca A. Musarra of Grant & Eisenhofer in Wilmington and Laurence Paskowitz of the Paskowitz Law Firm in Hartford, Connecticut.

An online docket-tracking service did not list counsel for AbbVie.

The case, captioned Geare v. AbbVie, has not yet been assigned to a judge.