- Attorneys general of 51 states and U.S. territories charged 17 generic drug manufacturers with fixing the prices of topical skin treatments in a wide-ranging lawsuit that claims the schemes went back more than a decade.
- The case, filed in the U.S. district court for Connecticut, claims the manufacturers, which include Pfizer, Novartis' Sandoz division, Mylan, Mallickrodt and Bausch Health, divided the market up into a "fair share" arrangement that allowed them all to raise prices without fearing competition.
- It is the third such lawsuit filed by state governments in a widening probe into generic marketing practices, which are claimed to have artificially inflated prices for consumers and insurers. The price-fixing charges are a sign of "the difficult environment the generics sector as a whole faces," SVB Leerink analyst Ami Fadia wrote.
The attorneys general claim the generic manufacturers violated the Sherman Antitrust Act, which guards against market allocation and price fixing. The lawsuit names 10 executives who allegedly took part in the scheme.
The states' complaint also names 80 drugs that were subject to market allocation, including hydrocortisone, mometasone cream for eczema, latanoprost drops for glaucoma. The market for topical drugs is easier to control because there are higher technical barriers to proving safety and efficacy and winning regulatory approval, the lawsuit states.
Six sales executives who have worked in various positions at Rising Pharmaceuticals, Glenmark, Aurobindo, Sandoz and Fougera — a company that was bought by Novartis' Sandoz unit — have cooperated with the investigation. The attorneys general, led by Connecticut's William Tong, say they have 20 million documents and records of calls among 600 sales and pricing executives in the generics industry to support their claims.
Market allocation in topical drugs originated with relationships between sales executives at Fougera, Perrigo Company and Taro Pharmaceuticals, which sold nearly two-thirds of the topical products marketed in the U.S. between 2007 and 2014.
The executives would divide the market by, for example, declining to bid for the business of certain drug store chains or distributors when a competitor entered the market, according to the lawsuit. Price increases would be done in a coordinated manner to avoid any competitive pressures.
Perrigo wasn't previously named in two previous complaints filed by state attorneys general. The company "intends to vigorously defend this case and looks forward to presenting a full defense," a spokesperson said in a statement.
A spokesperson for Sandoz said the allegations contained in the states' lawsuit has already been covered by a settlement it made with the Justice Department, which cost the company $195 million in a criminal penalty.
"The individual instances of misconduct at the core of the resolution we reached with the U.S. Department of Justice in March do not support the vast, systemic conspiracy the states allege," the spokesperson wrote in an email to BioPharma Dive. "We take seriously our compliance with antitrust laws, and we will continue to defend ourselves in this matter."
Taro said in a statement that it would defend against the allegations, calling them "without merit."