Relief for Migraine Sufferers Boosts Allergan’s Stock after Fed Crackdown

For migraine sufferers, the recent FDA approval of Botox as a migraine treatment gives them access to the only thing that might actually work—injections of Botox.

Migraine victims have long awaited a drug that would avoid migraines, not just treat them after they start. Studies prove Botox’s ability to block nerves that cause a migraine. In one study, chronic migraine sufferers getting Botox injections had 9 fewer days of headaches per month compared with those receiving a placebo, who reported 6.7 fewer.

In another study that was funded by Allergan, Botox users reported 7.8 fewer days per month of any headaches (including migraines) compared with 6.4 days’ fewer headaches reported by those receiving the placebo injections.

Guilty Plea

Allergan had previously been ordered by the Justice Department to pay $375 million in fines for unauthorized promotion of Botox for headaches and cerebral palsy from 2000 to 2005. The fine was lowered to $350 million upon Allergan’s willingness to plead guilty to the charges. Allergan was also ordered to forfeit $25 million in assets and to stick to a 5-year mandated plan to disclose any payments to doctors and annually certify that their various divisions meet federal health care requirements.

Who can use it?

Men and women who have a migraine headache at least 15 days a month with pain lasting at least four hours qualify for treatment. It is assumed that health insurance carriers will approve this as a covered expense, since no other treatment has provided similar results. Treatment includes multiple injections around the neck and head every 3 months.

Allergan spokesperson, Caroline Van Hove, believes that insurers are unlikely to fight coverage of the drug since “this is a population that hasn’t responded to any of the conventional treatments.” Botox was cleared for migraine treatment earlier this summer in the UK and the company anticipates approvals in the rest of Europe and Canada yet this year.

Stock Market Reaction

Allergan (AGN) is running around $72 per share this month (Oct 2010). A month ago it was averaging $66 per share. The company, which generated $1.3 billion in 2009 sales, may earn $1 billion more in annual revenue with the migraine approval, said Aaron Gal, a Sanford C. Bernstein & Co. analyst in New York, in a May 2010 report.

Allergan to Pay Over $600 Million Settlement

Allergan, the maker of Botox®, is being forced to pay over $600 million following a civil settlement and charges that marketed the popular drug for off-label purposes. According to the New York Times, Allergan was marketing Botox®—which is currently used to treat wrinkles and hyperhidrosis—for the off-label treatment of migraines.

Botox® is currently not approved by the Food and Drug Administration for the treatment of migraines. The issue was not that Botox® was being used to treat migraines; it was that doctors were receiving incentives from Allergan if they actively promoted the headache treatment to their patients. The Justice Department issued this statement:

“In 2003, Allergan doubled the size of its reimbursement team to assist doctors in obtaining payment for off-label Botox® injections. Allergan held workshops to teach doctors and their office staffs how to bill for off-label uses, conducted detailed audits of doctors’ billing records to demonstrate how they could make money by injecting Botox®, and operated the Botox® Reimbursement Hotline, which provided a wide array of free on-demand services to doctors for off-label uses. Allergan also lobbied government health care programs to expand coverage for off-label uses, directed physician workshops and dinners focused on off-label uses, paid doctors to attend “advisory boards” promoting off-label uses, and created a purportedly independent online neurotoxin education organization to stimulate increased use of Botox® for off-label indications.”

Allergan, based in Irvine, CA, admitted to marketing unapproved uses of Botox®—including treatment of headaches and blepharospasm—between 2000 and 2005. The company agreed to pay $225 million to resolve civil charges that it endorsed falls Medicare and Medicaid claims, however, they denied liability. The company is schedule to pay between $610-$615 million in the third quarter of 2010, nearly half of Botox®’s $1.3 billion from last year.

Botox® was originally approved by the FDA in 1989 for the treatment in hyperhidrosis and then again in 2002 for wrinkle reduction. There is still concern as to whether or not the settlement will have an effect on the FDA’s decision on whether or not to approve Botox® for migraine treatment. The FDA’s decision is due to be announced at the end of October.