Investor Seeks to Block AbbVie-Allergan Deal With Securities Lawsuit

A small investor who currently holds 20 shares of Allergan has filed a proposed securities class action lawsuit seeking to stop its purchase by AbbVie, according to reports.

In June, AbbVie announced a $63 billion transaction agreement to acquire Allergan at a 45% premium to its trading price ($188 a share).

The shareholder, Yuan Lan Swei, bought 40 shares in 2015 and sold half of them the following year, according to FiercePharma. The New Jersey lawsuit says the proxy statement detailing AbbVie’s proposed Allergan buy leaves out important shareholder info, such as cost savings and expenses. It also says any payouts given to AbbVie executives could cloud their judgement about the deal, which was assessed by analysts to be beneficial to Allergan shareholders.

According to the the report, the shareholder sued on behalf of other investors who could join the class and wants a court to delay the shareholder vote until key information is released.

Meanwhile, both senators as well as advocacy groups and unions have asked the Federal Trade Commission (FTC) to block the deal.

According to Reuters, last week the AbbVie-Allergan deal was cited in a letter to the FTC from a small group of Democratic senators. The letter was led by US presidential hopeful Senator Amy Klobuchar, D-Minnestota, and cites ongoing industry consolidation amidst an affordability crisis in prescription drugs for many Americans. Saying the problem affects 1 in 4 in the United States, the letter says, “It is more important than ever that the FTC take appropriate action to protect consumers from acquisitions that may threaten competition in drug markets, raise drug prices, or reduce patient access to essential medications.”

In addition, about a dozen advocacy groups and unions, including Public Citizen and the American Federation of Teachers, want the FTC to block the deal, and to go beyond what it usually considers when it looks at anticompetitive behavior.

Reuters reported that the groups warned that the deal could lead to a broader use of volume-based rebates or other incentives to insurers or pharmacy benefit managers; the use of such payments are one reason drugmakers have said prescription prices are high. The group also criticized Allergan for practices like attempting to transfer patents for its cyclosporine eye drops (Restasis) to a Native American tribe to protect it from patent challenges and delay market entry of less expensive generic versions.

Unions have long complained about the price of AbbVie’s brand-name Humira, which faced competition in Europe from biosimilar adalimumab for the first time in late 2018. While no adalimumab biosimilars are slated for US launches prior to 2023, the Humira maker has sought to mitigate the impact of biosimilars through the sales of novel agents.