House Oversight Committee subpoenas AbbVie over 'woefully inadequate' document production in price-gouging probe
Congress is turning up the heat on AbbVie $ABBV over its pricing policies.
The House Committee on Oversight and Reform is planning to subpoena the biopharma as part of a 2019 probe into the alleged price-gouging of Humira and Imbruvica, according to a memo released Monday. The move comes after the late Elijah Cummings, who chaired the committee, opened the investigation into a dozen drugmakers over 18 months ago and AbbVie did not provide lawmakers with requested documents.
“Over the course of the Committee’s investigation, AbbVie repeatedly failed to comply with the Committee’s requests and provided inadequate responses regarding Humira and Imbruvica,” chairwoman Carolyn Maloney (D-NY) wrote in the memo. “AbbVie has produced only limited documents about its pricing practices and strategies to preserve market share and pricing power for both products.”
The news sent AbbVie shares down a little over 3.5% in Tuesday trading. AbbVie flatly refuted the notion that it had not complied with previous requests.
“We’ve been working cooperatively with the House Oversight Committee since we received their initial letter in January 2019,” the company said in a statement. “In fact, we’ve provided thousands of documents and have had numerous conversations with the Committee staff. While we are surprised and disappointed the Committee chose to take this action, we will continue to work in good faith with them on this important subject.”
Investment-wise, some financial analysts did not see the subpoena as much of a threat to AbbVie. Evercore’s Josh Schimmer that this was an expected Congressional subpoena and, importantly, did not come from the Department of Justice, which is conducting its own inquiries into price-gouging. Given that this isn’t a criminal probe, Schimmer does not expect the government to levy fines against AbbVie.
“I’d look at this as another shot across the bow from Democrats on drug pricing/practices as opposed to any meaningful new risks for ABBV or the industry,” he wrote in a note to investors.
Humira, a rheumatoid arthritis treatment, and Imbruvica, a lymphoma therapy, are both huge blockbusters for AbbVie. Globally, the drugs pulled in a combined $23 billion-plus in 2019, with Humira netting $19.2 billion and Imbruvica $4.6 billion.
But they have garnered controversy over the years with AbbVie aggressively defending patents in court to stave off competition. According to a July analysis from the Initiative for Medicines, Access, and Knowledge, a non-profit that researches drug pricing, AbbVie has filed several patents for Imbruvica over the years with only incremental changes, giving the company an exclusivity window for nearly three decades. The Committee also noted in its memo that AbbVie has engaged in similar practices for Humira, filing 247 patents to extend exclusivity for 39 years.
When Cummings originally opened the investigation over 18 months ago, it ensnared big-name pharma companies like AstraZeneca, Eli Lilly, J&J, Pfizer and Sanofi. Since that time, Cummings had written two follow-up letters to AbbVie CEO Richard Gonzalez, with the second claiming in September 2019 that the company’s responses continued to be “woefully inadequate.” Tuesday’s memo states that while AbbVie provided documents the next February and again later in July, those document dumps “failed to show marked improvement” over previous attempts.
Maloney also noted that AbbVie was the only drug company of the original 12 to receive a second follow-up letter. The other companies involved in the probe are Amgen, Celgene, Mallinckrodt, Novartis, Novo Nordisk and Teva.