Twenty States Blast Price-Fixing of Generic Drugs

HARTFORD, Conn. (CN) – Connecticut and 19 states have led the charge against pharmaceutical giants that they say conspired to fix the prices of two generic drugs.

Filed with a federal judge in Hartford, the Dec. 15 complaint says Heritage Pharmaceuticals, Mylan Pharmaceuticals, Teva Pharmaceuticals and three other drugmakers conspired to manipulate the prices for doxycycline hyclate delayed release, an antibiotic, and glyburide, an oral diabetes medication.

Both Teva and Mylan denied the allegations. “To date, we have not found any evidence of price fixing within Teva and so on the facts we vigorously deny any allegations of wrongdoing,” Teva spokeswoman Denise Bradley said. Mylan Pharmaceuticals issued a similar statement: “To date, we know of no evidence that Mylan participated in price-fixing.”

A day before the suit was filed, the United States brought criminals charges against the former CEO and president of Heritage, Jeffrey Glazer and Jason Malek, respectively. Heritage, which sued both men in New Jersey last month, said it’s been cooperating with the Department of Justice’s continuing investigation.

“Recently Heritage initiated its own legal action against these same individuals to seek redress for an elaborate embezzlement and self-dealing scheme,” a Heritage spokesman said in a statement. “We are deeply disappointed by the misconduct and are committed to ensuring it does not happen again.”

Connecticut Attorney General George Jepsen said the price-fixing investigation started in July 2014. Because the probe remains ongoing, portions of the complaint, including text messages between top executives and sales reps, are redacted.

“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,” Jepsen said in a press release. “Ultimately, it was consumers – and, indeed, our healthcare system as a whole – who paid for these actions through artificially high prices for generic drugs. We intend to pursue this and other enforcement actions aggressively, and look forward to working with our colleagues across the country to restore competition and integrity to this important market.”

The other three drugmakers named as defendants are Aurobindo Pharma, Citron Pharma and Mayne Pharma. None returned a request for comment.

Jepsen’s office says investigators are still studying the prices of a number of generic drugs, but that they so far have found evidence of a well-coordinated and long-running conspiracy to fix prices and allocate markets for doxycycline hyclate delayed release and glyburide.

The lawsuit alleges the misconduct was conceived and carried out by senior drug company executives and their subordinate marketing and sales executives.

Coordination of the scheme occurred, according to the complaint, via direct interaction with their competitors at industry trade shows, customer conferences and other events, as well as through direct email, phone and text message communications.

“For example, in January 2014, at a time when the prices of a number of generic drugs were reportedly soaring, at least thirteen (13) high-ranking rnale executives, including CEOs, Presidents and Senior Vice Presidents of various generic drug manufacturers, met at a steakhouse in Bridgewater, New Jersey,” the complaint states. “An executive from defendant Aurobindo attended this particular dinner.”

The complaint goes on to explain how “female generic pharmaceutical sales representatives also get together regularly for what they refer to as a ‘Girls Night Out’ (GNO), or alternatively ‘Women in the Industry’ meetings and dinners.”

“During these GNOs, meetings and dinners, these representatives meet with their competitors and discuss competitively sensitive information,” the complaint continues.

Connecticut and the others states say the anticompetitive conduct caused significant, harmful and continuing effects in the country’s health care system.

“When entering a generic drug market, Heritage and other defendants routinely sought out their competitors in an effort to reach agreement to allocate market share, maintain high prices and/or avoid competing on price,” the complaint states. “These agreements had the effect of artificially maintaining high prices for a large number of generic drugs and creating an appearance of competition when in fact none existed.”

In 2015, sales of generic drugs in the United States were estimated at $74.5 billion dollars. Today, the generic pharmaceutical industry accounts for approximately 88 percent of all prescriptions written in the United States, according to the complaint.

The other plaintiff states are Delaware, Florida, Hawaii, Idaho, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Nevada, New York, North Dakota, Ohio, Pennsylvania, Virginia and Washington.

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