20 states sue 6 generic drugmakers over price fixing
- The New York Attorney General, along with attorneys general from 19 other states, on Thursday accused six generic drugmakers, including market leaders Teva Pharmaceuticals and Mylan, of conspiring to manipulate prices and limit competition for two generic drugs.
- Executives at the "highest levels" of many of the companies named in the lawsuit allegedly planned and directed schemes designed to fix prices and set market share for doxycycline hydrate delayed release, an antibiotic, and glyburide, a diabetes drug.
- While Thursday's suit focused only on the two drugs, the states uncovered a "wide-ranging series of conspiracies" involving numerous other drugs and companies, which will be addressed in time.
Charges are beginning to trickle out from several concurrent federal and state investigations into the pricing and marketing of generic drugs.
On Wednesday, the Antitrust Division of the Department of Justice unveiled charges against two former executives of Heritage Pharmaceuticals for their role in fixing prices for the two drugs singled out in Thursday's lawsuit.
Generic drugs, which make up the bulk of drugs prescribed in the U.S., typically are priced 80% to 90% lower than branded versions. In recent years, however, prices on dozens of generic drugs have climbed, sometimes dramatically so. Suspicion of the rationale for these price increases led the State of Connecticut to begin an investigation in July 2014. Congress and the Department of Justice opened up respective investigations shortly thereafter.
While drugmakers have blamed a myriad of factors for rising prices, the state attorneys general argue the truth is more simple.
"What the Plaintiff States have found through their investigation, however, is that the reason underlying many of these price increases is much more straightforward, and sinister — collusion among generic drug competitors," the lawsuit said.
Heritage Pharmaceuticals, Aurobindo Pharma, Citron Pharma, Mayne Pharma, Mylan Pharmaceuticals and Teva Pharmaceuticals all allegedly collaborated to artificially inflate and maintain prices, allocate market share and fix bids for both doxy DR and glyburide.
In response to an inquiry, Mylan said, "To date, we know of no evidence that Mylan participated in price fixing." A Teva spokesperson said the company was reviewing the complaint.
Aurobindo, Citron, Mayne did not return a request for comment by press time. Heritage would not comment beyond its statement regarding the separate DOJ charges, in which the company said it was fully cooperating with the federal agency.
The drugmakers took steps to avoid direct competition. Executives allegedly communicated with their counterparts at the other firms to agree on the amount of market share each company should be allocated, refusing to bid on certain contracts or submitting deliberately uncompetitive bids.
Communication took place either over the phone or in person, such as at industry dinners or "girls night out" events.
In the case of doxy DR, for example, Heritage entered the market in July 2013 when Mylan was the sole manufacturer supplying the drug to market. Heritage — which the states allege was the "principal architect and ringleader" of the schemes — contacted Mylan and struck an agreement to avoid a price war over the drug.
"Mylan agreed to 'walk away' from at least one large national wholesaler and one large pharmacy chain to allow Heritage to obtain the business and increase its market share," the lawsuit states.
Beyond allowing entry, decisions like the one taken by Mylan would give room for competitors to price their identical generic copycat drug higher than otherwise would be possible in a fully functioning market.
The lawsuit hinted more could be on the way as well, indicating the investigation had found evidence of schemes involving numerous drugs and companies. The DOJ is also expected to unveil more charges in what promises to be wide-ranging scrutiny of the generic pharmaceutical industry.
With criticism of high drug prices at a peak, the investigations have the potential to spark more calls for legislative and regulatory solutions.
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