(CN) – The California State Teachers Retirement System is taking Allergan to court, claiming the pharmaceutical company colluded with other drug makers to fix generic drug prices and broke federal securities laws.
The lawsuit names Allergan’s chief officers and board members as defendants. The company allegedly gave shareholders the impression that Allergan was “vigorously” competing against other drug manufacturers after the company raised the prices on its generic drugs, sometimes by 5000 percent beginning in 2013.
Meanwhile, Allergan’s competitors did the same at the same time, and at similar prices.
“Drastic parallel price increases of this nature are unusual in competitive markets, occurring only if there is a significant increase in production costs, a shortage of raw materials, accelerated demand or some other fundamental market change. No such change occurred to justify Allergan’s price increases,” the lawsuit states.
Subsequently, the U.S. Department of Justice stepped in, issuing Allergan a subpoena in August 2015 amid an investigation into price fixing in the industry. Allergan’s stock price fell by 5.2 percent on Aug. 6, 2015, and fell by 4.6 percent on Nov. 3, 2016, when news reports revealed that the DOJ planned to bring criminal antitrust charges against Allergan and other companies involved in price fixing.
The retirement fund claims the price of some Allergan drugs that were originally meant to be affordable remain artificially inflated to this day. It is represented by Daniel C. Girard, Adam E. Polk, Elizabeth A. Kramer, and Tom Watts of Girard Gibbs LLP in San Francisco.