Pain and Alpharma Gain From Purdue's Slip

As reported by the Associated Press last week, privately held Purdue Frederick Company and three of its executives were fined over $630 million after pleading guilty to "misleading the public" and for alleged illegal marketing practices with its pain drug OxyContin.

The fine was part of a settlement deal that Purdue made with the Department of Justice in May after it was accused of "illegally misbranding Oxycontin." As can be seen on this DOJ web page (scroll to middle of the page), Purdue and its top executives "acknowledged that it illegally marketed and promoted OxyContin by falsely claiming that OxyContin was less addictive, less subject to abuse and diversion, and less likely to cause withdrawal symptoms than other pain medications."

OxyContin abuse has been soaring in recent years, as the Drug Enforcement Agency notes. Since 1996, deaths related to the drug have jumped 400%. In Appalachian states like West Virginia, up to 90% of patients admitted into drug treatment centers "identified OxyContin as their primary drug of abuse."

As part of the deal with the DOJ, Purdue agreed to strict monitoring of its business and marketing practices for OxyContin. Having its hands (rightfully) tied behind its back when marketing OxyContin means that if competitors like Pain Therapeutics (Nasdaq: PTIE  ) or Alpharma (NYSE: ALO  ) can successfully bring their abuse-resistant drugs onto the market, then they stand to have an easier time gaining market share versus Purdue.

With the DEA, DOJ, and many doctors and pharmacies all crying out for OxyContin to be made more difficult to illegally abuse, the market is only getting bigger for whichever drug developers can bring harder-to-abuse versions of the drug through the regulatory process.

Now that Pain Therapeutics has finally completed patient enrollment in the pivotal phase 3 study for Remoxy, with results expected in the fourth quarter, the company looks to be in a good position to be the first to finish this race to develop a less abusable version of oxycodone. Alpharma is running neck and neck with Pain, though, and expects its unique abuse-resistant opioid to be awaiting FDA regulatory review in the first half of 2008.

Looking for more Foolish drug stock coverage? Check out the Fool's market-beating Rule Breakers newsletter to see all our recommendations, as well as get access to our message boards and exclusive content, with a 30-day free trial.

Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 532490, ~/Articles/ArticleHandler.aspx, 10/28/2016 4:30:08 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,161.19 -8.49 -0.05%
S&P 500 2,126.41 -6.63 -0.31%
NASD 5,190.10 -25.87 -0.50%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

3/18/2011 12:43 PM
ALO.DL2 $11.69 Down +0.00 +0.00%
Alpharma, Inc. CAPS Rating: **
PTIE $0.58 Down -0.03 -4.85%
Pain Therapeutics CAPS Rating: ***