Twenty states have announced that they have filed a lawsuit against generic-drug makers including Heritage Pharmaceuticals Inc., Teva Pharmaceuticals USA Inc., Mylan Pharmaceuticals Inc., Aurobindo Pharma USA Inc., Citron Pharma LLC, and Mayne Pharma (USA) Inc., alleging that the companies conspired to fix prices and constrain competition for antibiotics and diabetes treatments.
The suit, filed in Connecticut federal court (redacted version here), claims that an investigation by that state into the generic drug market has uncovered evidence that some of the companies illegally divided up the market for doxycycline hyclate, an antibiotic used to treat respiratory tract infections.
Mylan released a statement that said it knows “of no evidence” that it participated in price fixing. Teva said it has “not found evidence that would give rise to any civil or criminal liability.” No other companies have responded to requests for comment by Courant.
Connecticut Attorney General George Jepsen noted that the investigation began two years prior, when an assistant attorney general read a news report about high generic drug prices – “something seemed fishy.” Jepsen filed the civil lawsuit to seek financial damages on behalf of patients and the Connecticut’s Medicaid program. The investigation is ongoing and Jepsen noted that he believes this “is just the beginning.”
Jepsen will continue to not only pursue the present lawsuit, but also other enforcement actions, aggressively and will work with other state officials “to restore competition and integrity to this important market.”
The complaint accuses the defendants of coordinating their schemes through direct interaction with their competitors at industry trade shows, customer conferences, and other events, as well as through emails, phone calls, and text messages. The states have alleged that the efforts to fix and maintain prices, allocate markets, and thwart competition, caused significant, harmful, and continuing effects in America’s healthcare system.
Prices for dozens of generic drugs have "uncharacteristically risen," some skyrocketing for no apparent reason, prompting complaints from public officials, payers and consumers, the lawsuit says. In some cases, costs have doubled, tripled or increased up to 1,000 percent or more, state officials say.
The lawsuit states manufacturers of generic drugs have said the significant price increases were due to industry consolidation, plant closures required by the U.S. Food and Drug Administration (FDA), elimination of unprofitable generic drug product lines and other factors.
States allege that the drug companies knew their conduct was illegal and attempted to avoid communicating in writing, or once they knew of the investigation, attempted to delete written communications. Such conduct violates federal law barring monopolistic business practices, according to the States.
The pleadings request the Court stop the companies from engaging in illegal, anticompetitive behavior and for relief, including financial relief.
The lawsuit by the states comes one day after DOJ filed charges against two former Heritage Pharmaceutical executives for allegedly plotting to fix prices of antibiotics and diabetes treatments. This move by the DOJ marked the first charges in the criminal probe of the generic drug industry. Jeffrey Glazer, the former CEO, and Jason Malek, ex-president, were each charged with two counts of conspiring with other (unnamed) drugmakers, from April 2013 to at least December 2015.
While Heritage commented on the accusations of the executives, noting that its internal investigation found a “variety of serious misconduct” by the two individuals who were charged and they were fired. Heritage also said they “are fully cooperating with all aspects of the Department of Justice’s continuing investigation.”