Companies, Medications Added in Generic-Drug Antitrust Suit

Forty-six states allege drug manufacturers restrained competition

Forty-six state attorneys general taking part in a wide-ranging antitrust investigation of the generic drug industry are asking a federal court for permission to file a new complaint in the states’ pending lawsuit that increases the number of generic-drug manufacturer defendants from six to 18 and the number of drugs at issue from two to 15.

For the first time, the states are also suing senior executives at two generic-drug companies who are alleged to have engaged in the illegal conduct.

In the expanded complaint, the states allege a number of specific illegal agreements among the defendants to fix prices and allocate customers for a number of generic drugs. The states further allege that these conspiracies were part of a much broader, overarching industry code of conduct that enabled the defendant manufacturers to divvy up the market for specific generic drugs in accordance with an established, agreed-upon understanding for assigning each of the competitors their share of the market.

Previously, the lawsuit was filed against generic drug manufacturers Heritage Pharmaceuticals, Inc.; Aurobindo Pharma USA, Inc.; Citron Pharma, LLC; Mayne Pharma (USA), Inc.; Mylan Pharmaceuticals, Inc.; and Teva Pharmaceuticals USA, Inc. alleging that they entered into illegal conspiracies to unreasonably restrain trade, artificially inflate and manipulate prices, and reduce competition in the United States for two drugs: doxycycline hyclate delayed release, an antibiotic, and glyburide, an oral diabetes medication.

The states are seeking to expand the complaint to include Actavis Holdco U.S., Inc.; Actavis Pharma, Inc.; Ascend Laboratories, LLC; Apotex Corp.; Dr. Reddy's Laboratories, Inc.; Emcure Pharmaceuticals, Ltd.; Glenmark Pharmaceuticals, Inc.; Lannett Company, Inc.; Par Pharmaceutical Companies, Inc.; Sandoz, Inc.; Sun Pharmaceutical Industries, Inc.; and Zydus Pharmacuticuals (USA), Inc.

The expanded complaint also names two individual defendants: Rajiv Malik, president and executive director of Mylan N.V., which is the parent company of Mylan Pharmaceuticals, Inc.; and Satish Mehta, the chief executive officer and managing director of Emcure Pharmaceuticals, Ltd., which is the parent company of Heritage Pharmaceuticals, Inc.

The expanded complaint also adds allegations that the companies entered into conspiracies involving the following additional generic drugs: acetazolamide, doxycycline monohydrate, fosinopril-hydrochlorothiazide, glipizide-metformin, glyburide-metformin, leflunomide, meprobamate, nimodipine, nystatin, paromomycin, theophylline, verapamil, and zoledronic acid.

The lawsuit is pending as part of the multidistrict litigation in the U.S. District Court for the Eastern District of Pennsylvania. Portions of the expanded complaint are redacted to avoid compromising ongoing investigations.

In July 2014, the state of Connecticut initiated an antitrust investigation of the reasons behind suspicious price increases of certain generic drugs. The investigation, which is still ongoing regarding a number of additional generic drugs, generic drug companies, and key executives, uncovered evidence of well-coordinated and long-running conspiracies to fix prices and allocate markets for certain generic drugs.

The states allege that the defendants routinely coordinated their schemes through 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. The alleged anticompetitive conduct—including efforts to fix and maintain prices, allocate markets, and otherwise thwart competition—has resulted in artificially increased prices for generic drugs reimbursed by federal and state health care programs, such as Medicaid, and raised the coverage costs for employer-sponsored health plans and out-of-pocket costs for consumers. The states allege that the conduct caused significant, harmful, and continuing effects in the country’s health care system.

In 2015, generic drug sales in the United States were estimated at $74.5 billion; currently, the generic pharmaceutical industry accounts for approximately 88% of all prescriptions written in the United States.

Source: Connecticut State Office of the Attorney General; October 31, 2017.