Shares of AbbVie, Inc. (ABBV - Free Report) fell almost 3% on Tuesday following a lawsuit filed by the California insurance department. The lawsuit accused AbbVie of giving illegal kickbacks to doctors to prescribe its top-selling drug Humira, a treatment for rheumatoid arthritis and other inflammatory conditions.
California State Insurance Commissioner Dave Jones filed the complaint in Alameda County Superior Court on behalf of the State of California.
The lawsuit says that healthcare providers were given cash, trips and other gifts to write prescriptions for Humira. AbbVie provides many support services to patients after they are prescribed Humira including sending nurses — called Ambassadors by the company — to their homes to assist them with Humira therapy on behalf of doctors.
The lawsuit stated this was also a means to induce doctors to prescribe Humira by downplaying its dangerous side effects and risks. Jones said $1.2 billion was paid by health insurers for Humira related claims in recent years. This is the largest health insurance fraud case in the department’s history, said Jones.
AbbVie defended itself by saying that services like nursing support are not intended to “interfere with interactions between patients and their healthcare providers.”
The allegations were brought to the department’s attention by a nurse who was hired as an Ambassador by AbbVie some years ago in Florida.
So far this year, AbbVie’s stock has declined 4.3% against the industry’s increase of 6.1%.
Humira is key driver of AbbVie’s revenues, accounting for more than 60% of its total sales. Currently approved for 13 indications, Humira sales have increased consistently, backed by robust demand trends. Humira recorded sales of almost $10 billion in the first half of 2018.
Several companies including Amgen (AMGN - Free Report) /Allergan (AGN - Free Report) , Mylan (MYL - Free Report) , Coherus, Novartis’ Sandoz, Pfizer and Samsung Bioepis are working on biosimilar versions of Humira. The entry of biosimilars will have a huge impact on AbbVie’s financials.
Amgen, Mylan and Samsung Bioepis/Biogen’s Humira biosimilars are expected to be launched in the United States in 2023 while in the EU, Amgen and Biogen’s biosimilars are expected to be launched in October this year.The latest lawsuit adds to AbbVie’s Humira related woes.
AbbVie currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>