Sandoz, Pfizer and 2 Dozen Others Accused of Fixing Generic Drug Prices

(AP Photo/Mark Lennihan, File)

HARTFORD, Conn. (CN) — Saying that the allegations are backed by more than 20 million documents obtained with some 300 subpoenas, Connecticut Attorney General William Tong accused 26 companies Wednesday of inflating the prices of generic dermatology drugs.

The complaint itself clocks in at 500 pages and is joined by 46 other states plus four U.S. territories. It alleges an antitrust scheme involving 80 topical generic drugs accounting for billions of dollars of U.S. sales that are used for dermatology and the treatment of skin conditions.

In an afternoon conference call where he announced the Hartford federal court filing, Tong labeled the generic drug industry “the largest corporate cartel in American history.”

“What we see is competitors illegally sharing information about prices, they are colluding to fix and raise prices, and they’re colluding and conspiring to divide the market so that each of them, in their own words, gets their fair share,” Tong told reporters. “The result is that prices have gone up 2,000% or more in this complaint.” 

The states subpoenaed their evidence from telephone carriers, unearthing phone and text message records pertaining to numerous companies and individuals throughout the generic pharmaceutical industry, then loading those records into a software application for communications surveillance designed exclusively for law enforcement.

Among the records is a two-volume notebook containing the notes kept by one individual over a period of several years after he agreed to cooperate with the states’ investigation and memorialize both the discussions from internal company meetings and his phone calls with competitors.

Thick black redactions pockmark the complaint, which refers to several cooperating witnesses who worked in sales at the various generic drug companies. The states also used software to track the frequency of the calls between the companies. 

According to the complaint one of the cooperating witnesses told them they would “facilitate the communications, passing messages from one competitor to the other to ensure the anticompetitive agreement was understood by all three competitors.”

In addition to 26 corporate defendants, the complaint names 10 individual defendants. They are Ara Aprahamian, vice president of sales at Taro Pharmaceuticals; Mitchell Blashinsky, vice president of marketing at Taro Pharmaceuticals; Douglas Boothe, CEO of Actavis; James Grauso, vice president of sales at G&W Laboratories; Walt Kaczmarek, vice president of national sales at Fougera Pharmaceuticals; Armando Kellum, vice president of contracting and analytics at Sandoz; Kurt Orlofski, president and CEO of Wockhardt USA; Mike Perfetto, vice president of sales at Actavis; Erika Vogel-Baylor, former vice president of sales at G&W Labs Inc.; and John Wesoloski, senior vice president of commercial operations for Perrigo. 

The corporate defendants are Sandoz Inc., Actavis Holdco U.S. Inc., Actavis Elizabeth LLC, Actavis Pharma Inc., Amneal Pharmaceuticals Inc., Amneal Pharmaceuticals LLC, Aurobindo Pharma USA Inc., Bausch Health Americas Inc., Bausch Health US LLC, Fougera Pharmaceuticals Inc., G&W Laboratories Inc., Glenmark Pharmaceuticals Inc. USA, Greenstone LLC, Lannett Company Inc., Lupin Pharmaceuticals Inc., Mallinckrodt Inc., Mallinckrodt plc, Mallinckrodt LLC, Mylan Inc., Mylan Pharmaceuticals Inc., Perrigo New York Inc., Pfizer Inc., Sun Pharmaceutical Industries Inc., Taro Pharmaceuticals USA Inc., Teligent Inc., and Wockhardt USA LLC. 

Lead defendant Sandoz said it “disagrees with the extremely broad claims brought by the states in this case.”

“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 company added.” We take seriously our compliance with antitrust laws, and we will continue to defend ourselves in this matter.” 

Representatives of Actavis, G&W Laboratories and Tara Pharmaceuticals did not immediately respond to requests for comment.  

“Perrigo intends to vigorously defend this case and looks forward to presenting a full defense, which will include all of the facts,” a spokesperson said Wednesday. “Perrigo is, and will continue to be, a company dedicated to bringing quality, affordable generic products to consumers. Perrigo’s Core Values are Respect, Integrity and Responsibility. We believe in doing what is right and complying with laws. Perrigo expects to have no further comment while the matter is pending.”

Tong said since his office began investigating the generic drug industry in 2013 his team of lawyers have “uncovered a far-reaching conspiracy to fix prices and commit fraud at almost every corner of the generic drug industry.”  

The coalition of states and territories felt compelled to file the lawsuit to prevent the industry from “stealing billions of dollars from American families and our healthcare system every year,” he added.

It is the complaint over similar allegations filed to date. In addition to damages and civil penalties, the states and territories call for the court to restore competition to the generic drug market.

The first complaint, which is still pending in the U.S. District Court in the Eastern District of Pennsylvania, was filed in 2016 and now includes 18 corporate defendants, two individual defendants, and 15 generic drugs.

Two former executives from Heritage Pharmaceuticals, Jeffery Glazer and Jason Malek, have entered into settlement agreements and are cooperating with the attorneys general working group in that case. The second complaint, also pending in the Eastern District of Pennsylvania, was filed in 2019 against Teva Pharmaceuticals, 19 of the nation’s largest generic drug manufacturers and 16 individual senior executive defendants. The states are preparing for trial on that complaint, which is in the discovery phase.

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