Twenty states are accusing a group of generic drug makers of conspiring to keep the prices on generic medications artificially high. And the state attorneys general say the lawsuit filed in federal court in Connecticut Thursday may be just the beginning of a much larger legal action.
California is not listed as one of the 20 state plaintiffs.
The lawsuit alleges that the companies, led by New Jersey-based drug maker Heritage Pharmaceuticals, identified competitors and tried to reach agreements on how they could avoid competing for customers on price. The lawsuit was filed under seal in the U.S. District Court for the District of Connecticut. Portions of the complaint are redacted in order to avoid compromising the ongoing investigations.
The back story to this suit claims that prices for a large number of generic pharmaceutical drugs skyrocketed throughout 2013 and 2014. According to one report, “[t]he prices of more than 1,200 generic medications increased an average of 448 percent between July 2013 and July 2014.” Currently, the generic pharmaceutical industry accounts for approximately 88 percent of all prescriptions written in the United States.
A January 2014 survey of 1,000 members of the National Community Pharmacists Association (“NCPA”) found that more than 75% of the pharmacists surveyed reported higher prices on more than 25 generic drugs, with the prices sometimes spiking by 600% to 2,000% in some cases.
“While the principal architect of the conspiracies addressed in this lawsuit was Heritage Pharmaceuticals, we have evidence of widespread participation in illegal conspiracies across the generic drug industry,” Connecticut Attorney General George Jepsen said in a written press release. “We intend to pursue this and other enforcement actions aggressively.”
The other companies accused of price-fixing were Aurobindo Pharma USA, Inc., Citron Pharma, LLC, Mayne Pharma (USA), Inc., Mylan Pharmaceuticals, Inc. and Teva Pharmaceuticals USA, Inc.
The complaint describes in detail Heritage and other drug-company executives meeting at industry conferences and company-sponsored dinners where they would share information about the pricing. It also alleges that, to avoid having to lower prices, the companies would divvy up customers – such as pharmaceutical wholesalers, for example – rather than compete for the business.
The two drugs – a delayed release version of the antibiotic doxycycline hyclate and the diabetes drug glyburide – saw enormous price increases during the time of the alleged conspiracy, the legal complaint says.
The states’ lawsuit comes a day after the U.S. Justice Department filed criminal charges against Jeffrey Glazer, Heritage’s former CEO and Jason Malek, the company’s former president. It accuses the two men of conspiring with companies to manipulate drug prices.
The alleged conspiracy, outlined in court papers filed in Philadelphia, ran from as early as April 2013 to December 2015.
“By entering into unlawful agreements to fix prices and allocate consumers, these two executives sought to enrich themselves at the expense of sick and vulnerable individuals who rely upon access to generic pharmaceuticals as a more affordable alternative to brand-name medicines,” Deputy Assistant Attorney General Brent Snyder said.