More Legal Trouble Ahead for Horizon Pharma
Horizon Pharma has been in the spotlight for questionable ties to specialty pharmacies and its patient assistance programs. Recently, however, they were hit with an expected class action securities lawsuit over related allegations.
A suit has been filed on behalf of injured investors in the United States District Court for the Southern District of New York on behalf of investors who purchased Horizon stock between March 13, 2014 and February 26, 2016. In the pleadings, claims were made that Horizon "made materially false and misleading statements to investors" and hid unsavory information about its patient assistance programs.
According to the suit, Horizon set up its Prescriptions Made Easy (PME) plan, also known as HorizonCares, to "artificially inflate" prices for similar drugs, and that sales revenues from drugs sold through the PME program could not be sustained at those inflated levels. As a result, Horizon released financial statements that were "materially false and misleading at all relevant times," which opened Horizon up to more regulatory pushback.
According to the complaint, the PME program utilized specialty pharmacies to fill prescriptions for more common drugs, such as prescriptions for acne or arthritis pain. The prices were considered "artificially inflated" because typically when a prescription is sent to a specialty pharmacy, the likelihood that an insurer or pharmacist will try to switch the product from a Horizon product to a less-expensive generic is slim. It is interesting that Horizon is one of the only companies who work in the pain therapeutic area but does not have an opioid.
Materially False and Misleading Statements
The suit alleges that Horizon made materially false and misleading statements, and "failed to disclose material adverse facts about the Company's business, operations, prospects and performance. Specifically, Horizon allegedly made false or misleading statements about the following:
- Horizon's PME program was designed to artificially inflate the prices of minor differentiation standard retail drugs;
- Sales revenues from drugs sold through the PME were unsustainable at the inflated price levels;
- Horizon's use of the PME program left the Company subject to increased regulatory risks;
- Horizon received a subpoena from the U.S. Attorney for the Southern District of New York in November 2015; and
- As a result of the foregoing, Horizon's statements about its business, operations, and prospects were false and misleading and/or lacked a reasonable basis.
Questions and Concerns Listed in Complaint
In every class action suit, the lead plaintiff, in his or her complaint, must list common questions of law and fact that exist to all members of the Class and are more relevant and important than any questions that solely affect individual class members. This complaint lists the following questions of law and fact:
- Whether the federal securities laws were violated by defendants' acts as alleged herein;
- Whether statements made by defendants to the investing public during the Class Period misrepresented material facts about the business, operations and management of Horizon;
- Whether the Individual Defendants caused Horizon to issue false and misleading financial statements during the Class Period;
- Whether defendants acted knowingly or recklessly in issuing false and misleading financial statements;
- Whether the prices of Horizon securities during the Class Period were artificially inflated because of the defendants' conduct complained of herein; and
- Whether the members of the Class have sustained damages and, if so, what is the proper measure of damages.
The suit alleges that Horizon's actions took a toll on investors, as once the true details entered the market about the patient assistance programs, the price of the stock sharply dropped, leaving investors with monetary damages.
The case does not yet have a lead plaintiff, and multiple national law firms can be found requesting lead plaintiffs contact them, all hoping for a piece of a presumably large settlement pie.