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UPDATE 2-Brazilian police search Alexion offices in fraud probe
May 8, 2017 / 8:17 PM / in 5 months

UPDATE 2-Brazilian police search Alexion offices in fraud probe

(Adds analyst note, background on lawsuits)

SAO PAULO, May 8 (Reuters) - Brazilian police searched the Sao Paulo offices of drugmaker Alexion Pharmaceuticals Inc on Monday as part of a probe into its relationship with a patient advocacy group accused of filing fraudulent lawsuits to spur drug purchases.

Alexion confirmed that police had visited its office in Brazil and said in an emailed statement that it provided educational grants to support a Brazilian patient association, adding that it had not been charged with any wrongdoing.

Earlier, police said they had carried out two search-and-seizure orders in the cities of Sao Paulo and Campinas as part of a probe into sales of the drug Soliris, a costly blood disorder treatment that is Alexion’s flagship product.

Federal police did not name the company or patient association in a statement announcing the probe, but a police spokesman confirmed the Sao Paulo address that was searched belonged to representatives for the Soliris brand in Brazil.

Police said they were investigating the representatives’ role in some 900 lawsuits filed by a Campinas-based patients rights group, which forced some 1.2 billion reais ($375 million) of public spending on Soliris since 2010.

Despite a severely underfunded public health system, Brazil offers its citizens broad constitutional rights to medical care, leading to widespread lawsuits for costly drug treatments.

The Soliris lawsuits involved patients suffering from the rare disorder treated by drug, but also individuals with inconclusive or negative tests for the disease, police said.

The association’s lawyers did not charge fees to patients, leading investigators to suspect that they were being remunerated by the pharmaceutical industry, police said.

Alexion said it was the company’s “understanding” that the patients were all diagnosed with conditions that are indicated for treatment with Soliris, according to a statement provided by Alexion communications director Kim Diamond.

In March, Alexion tapped as chief executive former Baxalta CEO Ludwig Hantson, after the previous CEO and CFO were replaced in December due to an investigation into sales practices.

In November, Alexion delayed a quarterly filing due to an investigation into allegations by a former employee regarding sales practices involving Soliris.

Barclays analyst Geoff Meacham estimated in a research note that Brazil accounts for about $160 million of a $3.1 billion revenue forecast for 2017. He said it was too soon to know the investigation’s impact.

Alexion shares fell 3.7 percent to $124.04 in midday trading, on track for their biggest daily drop in four months. ($1 = 3.2 reais) (Reporting by Bruno Federowski and Lisandra Paraguassu; Additional reporting by Caroline Humer in New York; Editing by Brad Haynes and Cynthia Osterman)

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