Law360, New York (September 21, 2015, 4:39 PM ET) — Bayer HealthCare Pharmaceuticals Inc. filed suit in New Jersey federal court Friday alleging that a drug-information company conflated prices of the drugmaker’s Mirena intrauterine device andActavis PLC’s Liletta, creating potential reimbursement gaps and forcing Bayer to temporarily discount the contraceptive.
Since the “overwhelming majority” of health insurers rely on RJ Health Systems International LLC’s pricing information to set reimbursement prices, the listing of both products at the Liletta IUD system’s lower wholesale acquisition cost puts Bayer at risk of losing millions of dollars in monthly revenue, the drugmaker said.
Health care providers who purchase Mirena would be reimbursed at the Liletta rate, causing them to lose money every time they prescribe the device, according to the complaint. To combat the reimbursement gap, Bayer said it started discounting the treatment’s purchase price in July.
“If [Bayer] took no mitigating action, RJ Health’s conduct would cause serious harm to patients, health care providers and payors,” the complaint said. “The financial loss would essentially force providers to stop using Mirena, even if they believe that Mirena is the better option for their patients.”
Friday’s complaint alleges that more than 110 payors covering more than 110 million patients rely on RJ Health’s drug-information resources, including a system that validates and updates the price of each drug code. The company’s data is allegedly imported directly into customers’ computerized medical claims payment systems, automatically determining reimbursement claims.
In late April, RJ Health told Bayer it intended to reduce the code price on Mirena from $810.51 to $625, the acquisition cost for Liletta. Despite Bayer’s protest, the change took effect around June 1, the complaint said.
The U.S. Food and Drug Administration approved Mirena in 2000 as a contraceptive, as well as to treat heavy menstrual bleeding. The device is inserted into a woman’s uterus and is effective for up to five years, according to the complaint.
Liletta, approved in February, isn’t a generic version of Mirena, but rather, an entirely different system that only lasts up to three years and doesn’t treat bleeding issues, Bayer said. The drug allegedly has a higher monthly cost due to the shorter efficacy period, though its wholesale acquisition cost is lower.
In addition to the losses Bayer will sustain as a result of discounting Mirena to match the price of Liletta, the company could face a loss of its market share and goodwill due to health care providers being denied proper reimbursement. Bayer’s reputation might be left “irreparably harmed,” the complaint said.
“By misstating the price of Mirena, RJ Health is misleading insurance companies and potentially negatively impacting patients and health care providers,” Bayer said in a Monday statement. “Bayer strongly disagrees with the RJ Health misstatements and will take the necessary action to ensure that women and their physicians can continue to use Mirena without undue limitation.”
RJ Health claims that its database shows the real price for Mirena, though the code price is listed as $625, according to Bayer. However, the pharmaceutical company argued that the contention doesn’t save RJ Health because the code price is what’s automatically uploaded by insurance plans and other payors.
The drugmaker argued that “just as a retraction on page D-19 of a newspaper does not justify a willful misstatement on the front page, RJ Health’s purported correction falls short: RJ Health’s database still contains a materially false statement that has injured Bayer.”
Bayer’s suit alleges Lanham Act, Connecticut Unfair Trade Practices Act, tortious influence and negligent misrepresentation claims. The pharmaceutical company seeks an injunction barring RJ Health from making false statements regarding the two drugs.
The drugmaker also asks for compensatory damages to make up for any lost sales and the temporary discount, a trebled award or punitive damages for the drug-information company’s alleged misconduct, disgorgement, and attorneys’ fees and costs.