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Northwest OH Legal Blog

Monday, February 6, 2017

Lawsuits Filed against Generic Pharmaceutical Companies for Price-Fixing

On December 15, 2016, the attorneys general in 20 states filed an antitrust lawsuit against six generic drug makers.  The lawsuit alleges that the six named companies— Mylan, Teva Pharmaceuticals, Citron Pharma, Heritage Pharmaceuticals, Mayne Pharmaceuticals, and Aurobindo Pharmaceuticals—participated in a scheme to artificially inflate the prices of generic drugs, including an antibiotic drug and a diabetes drug.

The antitrust lawsuit parallels an ongoing federal investigation into price-fixing in the generic drug sector and follows a lawsuit filed on December 14, 2016 in the United States District Court for the Southern District of New York by 1199SEIU National Benefit Fund against two generic drug companies Lannett Company, Inc. (“Lannett”) and Mylan Pharmaceuticals, Inc. (“Mylan”).  The lawsuit filed against Lannett and Mylan alleges that the companies engaged in a conspiracy to illegally increase the prices of generic levothyroxine, a drug used to treat hypothyroidism.  Hypothyroidism is a condition in which the thyroid gland fails to produce sufficient levels of the thyroid hormone. 

The complaint filed by the 20 attorneys general describes an industry culture marked by regular dinners and social outings that, the suit says, frequently crossed the line and violated antitrust rules.  Generic drug makers that had hoped to begin selling a new drug first sought out competitors, the suit said, in an attempt to reach an agreement, illegally, on how the drug makers could avoid competing on price and keep their market share.  The complaint further states that the “price dynamic has changed for a large number of generic drugs,” and that “prices for generic drugs have uncharacteristically risen—some have skyrocketed—for no apparent reason, sparking outrage from public officials, payers, and consumers across the country whose costs have doubled, tripled, or in some case increased up to 1,000% or more.”

George Jepsen, Connecticut’s attorney general, whose office started the inquiry that led to the charges, commented that the complaint filed by the 20 attorneys general is “…just the tip of the iceberg.”  Although several other prominent generic drug companies have received subpoenas, it is unclear to what extent the inquiries will lead to further lawsuits.

The state officials confirmed that the charges against the six named drug manufacturers were part of a broad investigation into potential price-fixing within the pharmaceutical industry, suggesting that more charges could follow. The investigation, at the state and federal levels, has cast doubt over the industry, which has also been under a barrage of recent public criticism for its pricing methods.

Most multiemployer health care funds include pharmaceutical benefits programs that, in an effort to save costs, offer financial incentives for participants’ use of generic drugs instead of formulary or non-formulary brand name drugs to treat participants’ medical conditions.  Because it artificially raises the price of generic drugs, price-fixing by generic drug makers adversely affects the funds’ efforts to manage their health care costs.  As the price-fixing investigations progress, it is expected that some multiemployer health care funds will be asked to participate in class actions, either as lead plaintiffs or class action members, against generic drug makers that are alleged to have been engaged in illegal price-fixing actions.  Even funds that have a relatively small stake in the potential recovery can serve as lead plaintiffs in these class action lawsuits.


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