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December 12, 2018

Did a generic drug 'cartel' collude to fix prices on 300 drugs?

Daily Briefing

    Connecticut's Assistant Attorney General (AG) Joseph Nielsen said a lawsuit alleging a group of generic drugmakers colluded to fix drug prices has now expanded to include more than a dozen drugmakers and hundreds of generic drugs.

    Just updated: Your cheat sheets for understanding health care's legal landscape

    Lawsuit details

    The lawsuit, originally filed in December 2016 by 20 state AGs, stems from a two-year investigation conducted by Connecticut AG George Jepsen's (D) office. The original lawsuit accused six drugmakers of conspiring to fix prices for the antibiotic doxycycline hyclate and the diabetes treatment glyburide:

    • Aurobindo Pharma USA;
    • Citron Pharma;
    • Heritage, which the complaint alleged was the "ring leader" of the pricing schemes;
    • Mayne Pharma;
    • Mylan Pharmaceuticals; and
    • Teva Pharmaceuticals.

    According to the original lawsuit, Aurobindo, Citron, Heritage, and Teva colluded to raise prices on glyburide, while Heritage, Mayne, and Mylan conspired to allocate and divide the market for doxycycline. The lawsuit claimed the companies colluded on various occasions, including at informal so-called "industry dinners" and other outings, such as golf events and conferences.

    Jepsen in November 2017 filed a motion to amend the lawsuit on behalf of 47 state AGs, including those from the District of Columbia and Puerto Rico. The motion amended the lawsuit to add 12 generic drugmaker defendants and allegations regarding 13 generic drugs to the suit.

    Jepsen also amended the lawsuit to name Mylan President Rajiv Malik and Emcure CEO and Managing Director Satish Mehta as individual defendants. The motion alleged Malik and Mehta spoke directly to agree on their companies' share of the market for doxycycline hyclate.

    A federal judge last month ruled the states involved in the suit can share evidence, which includes more than one million emails, cellphone texts, and other documents.

    AGs again expand the lawsuit's scope

    Nielsen during an interview with the Washington Post said the AGs have again expanded the lawsuit to include at least 16 companies and 300 generic drugs. Citing the volume of the allegations, Nielsen said, "This is most likely the largest cartel in the history of the United States."

    According to the Post, antitrust investigators are expected to add more defendants to the lawsuit and provide additional details on the case in the coming months.


    Michael Cole, an assistant AG in Connecticut who is involved in the case, said price collusion is no longer widespread in the drug industry because authorities in recent years began issuing subpoenas to investigate drug prices. However, Cole said drug prices remain artificially inflated. "There have not been rollbacks in the price increases. We're still paying," Cole said.

    Heritage did not respond to requests for comment, but two of the company's executives in 2017 pleaded guilty to federal charges of conspiring to fix prices and stifling market competition, the Post reports. Under the terms of their plea agreements, the two executives agreed to cooperate with the Department of Justice's investigation into price collusion among generic drugmakers.

    Teva did not respond to a request for comment, but the company in a court filing said the price-fixing allegations "are entirely conclusory and devoid of any facts," according to the Post.

    Mylan denied any wrongdoing, the Post reports. The company said, "We have been investigating these allegations thoroughly and have found no evidence of price fixing on the part of Mylan or its employees. Mylan has deep faith in the integrity of … Malik and stands behind him fully."

    According to the Post, Dr. Reddy's and Sun did not respond to requests for comment, and a Justice Department spokesperson declined to comment on the case (Rowland, Washington Post, 12/9; Baker, "Vitals," Axios, 12/11).

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