Maryland Attorney General Brian E. Frosh announced a multistate 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. The lawsuit, filed in U.S. District Court for the District of Connecticut, also names 15 individual senior executives as 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 prices affecting the health insurance market, taxpayer-funded healthcare programs like Medicare and Medicaid, and individuals who must pay artificially-inflated prices for their prescription drugs.
The complaint alleges that Teva, Sandoz, Mylan, Pfizer and 16 other generic drug manufacturers engaged in a broad, coordinated and systematic campaign to conspire with each other to fix prices, allocate markets and rig bids for more than 100 different generic drugs. The drugs span all types, including tablets, capsules, suspensions, creams, gels, ointments, and classes, including statins, ace inhibitors, beta blockers, antibiotics, anti-depressants, contraceptives, non-steroidal anti-inflammatory drugs, and treat a range of diseases and conditions from basic infections to diabetes, cancer, epilepsy, multiple sclerosis, HIV, ADHD, and more. In some instances, the coordinated price increases were over 1,000 percent.
The complaint lays out an interconnected web of industry executives where these competitors met with each other during industry dinners, “girls nights out,” lunches, cocktail parties, golf outings, and communicated via frequent telephone calls, emails and text messages that sowed the seeds for their illegal agreements. Defendants used terms like “fair share,” “playing nice in the sandbox,” and, “responsible competitor” to describe how they unlawfully discouraged competition, raised prices and enforced an ingrained culture of collusion.
The lawsuit seeks damages, equitable relief to restore competition to the market for generic drugs and civil penalties potentially into the billions of dollars.
“Our complaint alleges that these companies and individuals engaged in an old fashioned price fixing conspiracy. The drugs in question are used by millions of people for conditions that range from diabetes to cancer to depression, and we allege that their scheme cheated vulnerable patients, the State of Maryland and health insurance programs to the tune of billions of dollars,” said Attorney General Frosh.
The complaint is the second to be filed in an ongoing, expanding investigation. The first complaint, pending in U.S. District Court in the Eastern District of Pennsylvania, includes 18 corporate defendants, two individual defendants, and 15 generic drugs. Two former executives from Heritage Pharmaceuticals, Inc., Jeffery Glazer and Jason Malek, have entered into settlement agreements and are cooperating with the Attorneys General working group in that case.