The Booth Family Trust filed suit on Wednesday in the District of Massachusetts against the Biogen Board of Directors, in a derivative complaint on behalf of Biogen, Inc. They allege that the Biogen board breached their fiduciary duties, violated federal securities laws, and engaged in other misconduct that caused Biogen to suffer material damage.
The plaintiff argues that the defendants had a duty “to ensure that Biogen implemented and maintained an effective system of internal controls to ensure that the Company operated in compliance with the laws, rules and regulations that guide its core operations.” Further, they had a duty to act appropriately and accordingly when they uncovered misconduct within the company.
Because the defendants did not properly fulfill these duties, the trust says, Biogen was subject to substantial fines and censures following an investigation of the company by the federal government. In 2016, they were fined $22 million for a “seed and sweep” scheme in their sales and marketing practices that the Department of Justice contended was in violation of the Anti-Kickback Statute.
More recently, Biogen was sued by health insurer Humana. The Medicaid insurance provider sued Biogen for $2 billion in damages in an effort to “recover the amounts it paid to cover improper Medicaid claims submitted as part of the seed and sweep scheme.”
Biogen also allegedly engaged in an additional scheme where they manipulated clinical trial data to better suit their Alzheimer’s drug, aducanumab. The results were manipulated as a method of speeding of the Food and Drug Administration (FDA) approval process for the drug. Initial clinical studies of the drug in 2019 indicated that it was ineffective, but the drug was an important part of the Biogen business plan. According to the complaint, the adjustment of the data was meant to incorrectly portray the drug as effective. Biogen’s Chief Medical Officer even met with the Head of the FDA Office of Neuroscience as a behind-the-scenes way of pushing for approval, which the plaintiff stresses the defendants were aware of.
The FDA voted unanimously against the approval of the drug, yet “extended a lifeline to the Company by suggesting accelerated approval of the drug based on its ability to remove plaque.” The drug was approved in June 2021 as a result of the collaboration between the FDA and Biogen. When the collaboration was revealed to the public, government investigations into the drug were launched, the complaint said
The company is now wrapped up in multiple lawsuits for their false and misleading statements, material omissions, and unlawful collaborations, per the complaint.
In order to establish futility, the plaintiff asserts that the defendants are “neither disinterested nor independent” and with them in place Biogen will “never recover its damages nor properly remediate the weaknesses in its internal controls and corporate governance practices and procedures.”
The complaint cites violations of the exchange act, breach of fiduciary duty, waste of corporate assets and aiding and abetting. The plaintiff seeks judgment that they are an adequate representative of Biogen, favorable judgment on all counts, damages, pre and post-judgment interest, direction for Biogen to take the necessary actions to reform and improve the company, the defendant’s disgorgement of profits, litigation fees, and any other relief deemed proper by the court.
The plaintiff is represented by Hutchings Barsamian Mandelcorn LLP.