Virginia joins states suing generic drug manufacturers

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Virginia Attorney General Mark R. Herring, along with a bipartisan coalition of 44 states, has filed a wide-ranging lawsuit against Teva Pharmaceuticals and 19 of the nation’s largest generic drug manufacturers alleging a broad conspiracy to artificially inflate and manipulate prices, reduce competition and unreasonably restrain trade for more than 100 different generic drugs.

Herring filed a similar lawsuit in 2016 against generic drugmakers Heritage Pharmaceuticals, Inc., Aurobindo Pharma USA, Inc., Citron Pharma, LLC, Mayne Pharma (USA), Inc., Mylan Pharmaceuticals, Inc. and Teva Pharmaceuticals USA, Inc.

The lawsuit also names 15 individual senior executive defendants at the heart of the conspiracy who were responsible for sales, marketing, pricing and operations.

The drugs at issue account for billions of dollars of sales in the United States, and the alleged schemes increased prescription drug prices for individuals, private insurers, and programs like Medicare and Medicaid.

Sticker shock

“People who play games with drug prices are playing games with peoples’ lives,” said Attorney General Mark Herring. “I’m sure nearly every Virginian has gotten sticker shock over the cost of a prescription at some point, and because of the illegal conduct we’re alleging in this suit, the generic alternative may not have offered much in the way of savings.”

The complaint alleges that Teva, Sandoz, Mylan, Pfizer and 16 other generic drug manufacturers engaged in a broad, coordinated and systematic campaign to fix prices, allocate markets and rig bids for more than 100 different generic drugs. In some instances, the coordinated price increases were more than 1,000 percent.

The drugs allegedly subject to manipulation span all types, including tablets, capsules, suspensions, creams, gels, ointments, and drug classes, including:

  • statins
  • ace inhibitors
  • beta blockers
  • antibiotics
  • anti-depressants
  • contraceptives
  • non-steroidal anti-inflammatory drugs.

The drugs in question were designed to treat a range of diseases and conditions from basic infections to diabetes, cancer, epilepsy, multiple sclerosis, HIV, ADHD, and more.

The complaint describes an interconnected web of industry executives who met during industry dinners, social events, lunches, cocktail parties, and golf outings and communicated via frequent telephone calls, emails, and text messages to coordinate their illegal agreements. The defendants used terms like “fair share” and “playing nice in the sandbox” to describe how they unlawfully discouraged competition by dividing up markets, raising prices, and enforcing an ingrained culture of collusion.

The complaint is the second to be filed in an ongoing, expanding investigation that is possibly the largest cartel case in the history of the United States. The first complaint, still pending in 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.

This second lawsuit seeks damages, civil penalties, and actions by the court to restore competition to the generic drug market. It has been filed in U.S. District Court for the District of Connecticut.

 

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Truman Lewis
A former reporter and bureau chief, Truman Lewis has covered presidential campaigns, state politics and stories ranging from organized crime to environmental and consumer protection.