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Impax Laboratories Sues Turing Pharmaceuticals Over Breach Of Contract

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Earlier this week, Impax Laboratories asked a federal judge to stop Turing from selling the drug under their name.

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May 9, 2016 | by Sarah Massey, M.Sc.

The lab that previously owned the rights to the toxoplasmosis drug, Daraprim, is suing Martin Shkreli’s former company, Turing Pharmaceuticals, over a breach of contract. Earlier this week, Impax Laboratories asked a federal judge to stop Turing from selling the drug under their name.

According to California-based pharmaceutical company, Turing violated all three provisions of the purchase agreement. As CEO of Turing, Shkreli made headlines last year when he raised the price of the drug by over 4,000 percent.

Turing acquired the rights to Daraprim in August of 2015, along with a large number of prepackaged bottles of the drug. According to the lawsuit filed by Impax, Turing used the company’s national drug code (NDC) – an identification number unique to the treatment – to sell the drug.

As a result, Impax was required to make certifications and rebate payments to the government, with the condition that Turing would reimburse them for their Medicaid rebate liability. In addition, Impax alleges that Turing agreed to report their monthly pricing data for Daraprim.

Finally, Impax says that Shkreli’s former company agreed to conduct business in a manner that would not have a negative effect on, “the value of the goodwill pertaining to Impax's trademarks.” Impax claims that just eight months after this agreement was made, Turing has failed to deliver on all of these responsibilities.



“As a result of these breaches of the purchase agreement, Impax has suffered serious financial, legal and reputational harm, including over $20 million in rebate liability that is owed and past due to Impax by Turing, plus additional rebate liability that continues to accrue by virtue of Turing's sales activities for Daraprim inventory under Impax's NDCs,” said the complaint.

The $20 million bill can be partially attributed to Turing’s colossal price hike on Daraprim, according to Impax. The company was forced to pay over 50 times the Medicaid rebate expected by Impax, when it sold the rights last year.

“At present, Turing owes and is past due on approximately $20 million in rebate liability that Impax has invoiced to it for [quarter three] 2015 and [quarter four] 2015,” said the lawsuit. “Further, Impax has invoiced Turing for an additional approximately $10 million which will be due and owing on May 19, 2016. Impax has paid over $5 million in rebate liability to CMS on behalf of Truing, and in May 2016, Impax will make additional payments of approximately $25 million to state Medicaid agencies, also on behalf of Turing.”

As for the damage to Impax’s reputation, the company says the much-publicized Daraprim pricing scandal has tarnished their image. Impax is seeking over $20 million in damages, along with a judgment allowing them to stop Turing from selling Daraprim using their NDC.


Keywords: Turing Pharmaceuticals, Martin Shkreli, Drug Pricing


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