Gilead hat Ärger mit der Justiz
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Shares dove more than 5% at one point before ending the trading day down 3.5% to 80.91 on the stock market today. The biotech group collectively rose 1% to a 20-month high. Gilead’s pitfall followed a report from Forbes late Tuesday noting the Ninth Circuit Court of Appeals had revived the 2015 court case. The case was revived July 7.
The case alleges that Gilead violated the False Claims Act by telling the Food and Drug Administration it would source an active ingredient, commonly known as FTC, used in HIV drugs Emtriva, Truvada and Atripla from facilities in Canada, Germany, the U.S. and South Korea.
Two former employees claim Gilead instead contracted with an unauthorized Chinese firm to manufacture unapproved FTC at unregistered facilities over the course of 16 months beginning in December 2007.
Gilead allegedly did so to „save money and trigger price reduction clauses in contracts with other FTC suppliers,“ according to the 2015 lawsuit. Eventually, it gained approval for use of that supplier’s FTC in 2010, but had already been using its ingredients in its finished products for two years.
Contamination issues, including two recalls of contaminated products, led Gilead to stop using that supplier in 2014. But Gilead never acknowledged or notified the FDA about bad test results or contamination issues, according to the lawsuit.
To conceal its use of illicit FTC, Gilead allegedly imported the ingredients through its Canadian facilities and used fraudulent labeling, the whistleblowers say. Labels and paperwork were allegedly obscured or augmented, and registered manufacturers were credited for supplying the FTC.
One of the whistleblowers was terminated in 2009. The duo brought an initial suit in January 2015 and an amended suit in June 2015. Both prior cases were dismissed. Gilead didn’t immediately return a request for comment from Investor’s Business Daily.