The lawsuit alleges that the drugmakers colluded on a number of occasions, including so-called “industry dinners,” to identify competitors and reach agreements on how they could avoid competing for customers on price. The companies are also accused of divvying up customers to avoid having to lower prices rather than competing for business.
The firms named in the complaint are: Heritage Pharmaceuticals Inc., Aurobindo Pharma USA Inc., Citron Pharma LLC, Mayne Pharma Inc., Mylan Pharmaceuticals Inc. and Teva Pharmaceuticals USA Inc.
“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,” said Connecticut Attorney General George Jepsen. “We intend to pursue this and other enforcement actions aggressively.”
The two medications — a delayed release version of the antibiotic doxycycline hyclate and the diabetes drug glyburide — saw massive price increases as a result of the conspiracy, according to the lawsuit.
With regards to doxycycline, the complaint alleges that Heritage conspired with Mylan, the only generic manufacturer selling the drug at the time, to split the market to avoid competing with each other over price. In cases where Mylan competed for business, the lawsuit contends that Heritage contacted the company directly and advised it to back off.
“The objective was to avoid a price war which would reduce profitability for both companies,” the complaint states.
A congressional investigation found that the price of doxycycline rose over 8,000% from October 2013 to April 2014, and that there were shortages of various formulations of the drug during the same time period.
The 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, accusing the men of conspiring with companies to fix drug prices.
Both Glazer and Malek were fired in August, and Heritage has filed a lawsuit accusing them of embezzlement.
“We are deeply disappointed by the misconduct and are committed to ensuring it does not happen again,” a Heritage spokesperson said of the former executives, maintaining that the company is cooperating fully with the investigation.
The Justice Department has sent subpoenas to several other generic drug manufacturers and to some individual executives, seeking information about product pricing and communications with competitors, according to filings with the Securities and Exchange Commission (SEC). The agency is expected to remain active in its pursuit of drugmakers involved in price-fixing schemes.
“This is just the beginning of our work,” Jepsen said. “We think that this is kind of the tip of the iceberg.”
Source: The New York Times