Rite Aid Corporation (NYSE:RAD) has filed a lawsuit against Medicis Pharmaceutical Corp. stating that the company has been involved in malpractice. The lawsuit claims that Medicis filed improper petitions and entered into unlawful agreements with their competitors to keep generic versions of their acne drug, Solodyn, from reaching the market. The case has been filed as an anti-trust lawsuit, in the district of Pennsylvania.
Details in the suit state that Medicis used schemes to suppress and/or delay generic competition to Solodyn. This was done to help the company maintain its monopoly in the minocycline hydrochloride tablets in the market. Rite Aid believes that Medicis made use of sham patents and reverse payment deals with competitors. RAD also claims that the competition for Solodyn would have begun years ago, had the company not intervened with unlawful means.
Currently, Solodyn alone accounts for 50% of the company’s revenue. Being the only drug of its kind in the market, Medicis has been exploiting the monopoly to the fullest. Had the competition for the drug started, it would have resulted in substantial savings for consumers. Rite Aid had initiated the lawsuit on its own behalf and as an assignee of McKeeson Corp. The later being a wholesaler, had purchased the drug from Medicis, only to resale to Rite Aid.
If the case goes in the direction of Rite Aid, Medicis could find itself in the violation of the Sherman Antitrust act. The result would be a permanent ban on their illegal actions and proceedings. Additionally, Medicis would also have to bare the overcharges and court costs and anymore penalties the court might see just. However, if the things go the other way round, Rite Aid might be the one with a hefty fine on its head. In either case both the companies are to be temporarily effected in terms of trading.
Rite Aid Corporation (NYSE:RAD) closed at $7.92, losing 1% on April 20. The company currently trades 981.77 million shares in the market, with a 52-week range of $4.42-$9.07.
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