May 13, 2019

20 drugmakers conspired to inflate generic drug prices, 44 states allege

Daily Briefing

    A group of 44 state prosecutors on Friday filed a lawsuit alleging 20 drugmakers conspired to hinder generic drug competition and inflate drug prices.

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    According to Reuters, the new lawsuit is "parallel" to a legal case filed by a group of attorneys general (AGs) in December 2016. However, the latest lawsuit is more "expansive," the New York Times reports. 

    Lawsuit details

    The states in a 500-page lawsuit filed in a U.S. District Court in Connecticut accuse 20 drugmakers and 15 individuals of orchestrating an illegal scheme to divide the generic drug market in order to avoid competition, prevent price decreases, and spur price increases. The lawsuit alleges that the drugmakers reached discreet agreements to ensure that each of them received a "fair share" of the market, and that the prices of generic drugs did not fall. The lawsuit states, "Rather than enter a particular generic drug market by competing on price in order to gain market share, competitors in the generic drug industry would systematically and routinely communicate with one another directly, divvy up customers to create an artificial equilibrium in the market, and then maintain anticompetitively high prices."

    However, the lawsuit claims that generic drugmakers in 2012 became "unsatisfied with the status quo of 'fair share' and the mere avoidance of price erosion," which led the drugmakers—including Mylan, Novartis' subsidiary Sandoz, Pfizer, Teva Pharmaceuticals, and other co-conspirators—to "embar[k] on one of the most egregious and damaging price-fixing conspiracies in the history of the United States

    The lawsuit alleges that Teva led the conspiracy, and the drugmakers colluded to significantly increase the prices of 86 treatments between 2013 and 2015. The lawsuit claims that, overall, the conspiracy affected more than 100 generic drugs.

    The lawsuit claims that the drugmakers sometimes conspired to inflate drug prices by more than 1,000%, The affected generic drugs included capsules, creams, ointments, and tablets to treat conditions such as cancer, diabetes, epilepsy, high blood pressure, and high cholesterol, the lawsuit states. As a result of the price increases, consumers, state health plans, Medicare, and Medicare paid "substantially inflated and anticompetitive prices for numerous generic pharmaceutical drugs" as drugmakers gained a profit, the lawsuit claims.

    The lawsuit alleges that the generic drugmakers involved in the scheme knew they had engaged in illegal actions. As such, the generic drugmakers avoided maintaining written records and coordinated their schemes at industry meals, golf outings, parties and other networking events, the suit claims.

    The states are seeking civil penalties, damages, and court actions to restore generic drug market competition. The six states that did not join the suit are Arkansas, California, Georgia, New Hampshire, Texas, and Wyoming.

    Comments

    New Jersey AG Gurbir Grewal (D) said, "We all know that prescription drugs can be expensive. Now we know that high drug prices have been driven in part by an illegal conspiracy among generic drug companies to inflate their prices."

    Nevada Gov. Steve Sisolak (D) said, "The level of corporate greed alleged in this multistate lawsuit is heartless and unconscionable."

    Teva denied the allegations, saying, "The allegations in this new complaint, and in the litigation more generally, are just that—allegations." The company said it "continues to review the issue internally and has not engaged in any conduct that would lead to civil or criminal liability."

    Pfizer also denied any wrongdoing, the Times reports.

    Novartis similarly denied the allegations, according to Reuters. The company said, "We believe that these claims are without merit and will vigorously contest them. Sandoz takes its obligations under the antitrust laws seriously. We will continue to be committed to providing high-quality, affordable medicines to U.S. patients, and conducting business with customers and the government with integrity" (Bartz/Chiacu, Reuters, 5/11; Murphy, New York Times, 5/11; Owens, "Vitals," Axios, 5/13; Miller, Reuters, 5/13; Scheer, Reuters, 5/12; Diamond, "Pulse," Politico, 5/13).

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    To better understand increasingly complex pharmacy issues and the critical role pharmacy plays in overall health system success, download our executive briefings on hot pharmacy topics.

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