The pharmaceutical company Impax Laboratories was recently rocked by a securities class action lawsuit alleging false or misleading statements by the company. To learn more this case, visit Battea’s Impax case summary.
Specifically, the complaint states that Impax’s statements about its business operations for a period of more than two and a half years failed to disclose that its actions would potentially make it subject to investigation by government officials at both the state and federal levels, and that these investigations were likely to result in criminal charges against both the company and potentially its executives. Further, the suit alleges that the company didn’t have properly effective internal controls for financial reporting. The class action suit has a class period of Feb. 25, 2014, through Nov. 3, 2016.
A closer look at the situation
In early November, 2016, the U.S. Department of Justice announced that it had launched an investigation in 2014 into more than a dozen pharma companies – including Impax – potentially colluding on generic drug prices, according to a report from Bloomberg Markets. Impax, and nearly all of the other companies in the investigation, say they are working with officials to get to the heart of the matter.
In late 2013, Impax and another drug company allegedly boosted generic drug prices by about $1 on a per-pill basis, and another followed shortly thereafter, the report said. In early 2015, a fourth raised prices to about the same level. During this entire time, the per-pill price barely budged for all the companies involved, and all were at roughly the same level of about $1.20 per pill. The issue, then, is whether the competing companies colluded to set their prices at the same level, or on issues that would eventually affect prices such as discounts, production or fees.
And at the same time as the Justice Department is conducting its investigation, Connecticut Attorney General George Jepsen is trying to start a state-led effort as well, the report said. Connecticut first issued subpoenas on this issue in mid-2014, a few months ahead of the Justice Department’s. Industry experts say generic drug pricing is a huge issue in the pharma industry because these types of medications account for about 88 percent of all prescriptions nationwide, and are often meant to serve as low-cost alternatives for consumers looking to avoid the sometimes high costs of brand-name drugs.
How stock prices moved
The DOJ investigation came to light in early November of this year, and the effect on Impax’s stock price was immediate. The day before the revelations it stood at $20.50 per share, but fell $4 the next day. And a few days after that, it was below $13 per share. Currently, Impax’s stock is trading at $12.45 per share, down significantly from the year-to-date peak of $42.65. As recently as mid-July 2015, the stock was trading above $50 per share.
For more information on this case or other class action litigations, please contact Sam Wankel, Senior Vice President, Research, Battea Global Litigation Research, Inc., at 203-987-4949 or firstname.lastname@example.org.