How Getting Sued Is Key to AstraZeneca’s Marketing Strategy for Seroquel | BNET

Why is AZ engaging in what appears to be death by a thousand legal cuts? It turns out that when you run the numbers, there’s a case to be made that it’s actually cheaper for AZ to lift its Seroquel revenues with unlawful promotions (and then settle the cases that ensue) than it is to either market the drug within the law or litigate the cases at trial.

I first discussed whether this might be happening in March:

Take, for instance, AstraZeneca (AZN)’s settlement with the DOJ over its marketing of Seroquel. The settlement was for $520 million. Seroquel makes $1.2 billion per quarter for AZ. For AZ to limit its financial damage, it must now make sure that Seroquel absolutely maximizes its revenues before its patent expires — and the way to do that, frankly, is to walk right up to the legal line in promoting the drug. Or to step over it entirely.

I’m not suggesting AZ is actually doing that of course. But you can see that the incentives are perverse.

Let’s put some more numbers on that. Bloomberg reports that Seroquel generated $4.87 billion for AZ last year, or 15 percent its total revenue. It’s been on the market since 1998. And it’s made more than  $1 billion every year since 2002. Therefore, the total legal expenses of $1.2 billion ($55 million plus $656 million plus $520 million) are just a tiny fraction of AZ’s total Seroquel revenues.

via bnet.com

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