On Dec. 14, 2016, 20 state attorneys general filed suit against several Defendants in federal district court in Connecticut. The attorneys general have alleged that pharmaceutical manufacturers Aurobindo Pharma USA, Inc.; Citron Pharma, LLC; Heritage Pharmaceuticals, Inc.; Mayne Pharma (USA), Inc.; and Teva Pharmaceuticals USA, Inc., entered into illegal conspiracies to fix the market and artificially inflate the prices for two common generic drugs, doxycycline hyclate and glyburide.
Governmental investigations by the Department of Justice (DOJ) and state attorneys general have revealed that top executives for these six drug companies and their sales representatives unlawfully increased the prices of these drugs, and potentially a large number of other generic drugs, in addition to entering into agreements to divide the drug market among themselves.
For example, it is alleged that Mylan Pharmaceuticals, Inc. allocated the market by agreeing to abandon at least one major wholesaler and one large pharmacy chain to allow another manufacturer, Heritage Pharmaceuticals, to gain a foothold in the doxycycline hyclate market, which is a delayed release antibiotic. The attorneys general have also alleged that when pharmaceutical manufacturer Mayne Pharma (USA), Inc. entered the market in 2014 for doxycycline, Mayne contacted Heritage and Mylan to negotiate details regarding how prices would be set and customers would be allocated. The complaint further alleges that Heritage reached out to its contacts at each competitor company and attempted to reach agreements on price increases for glyburide, an older drug used to treat diabetes.
Governmental investigators believe that these drug manufacturers seek out rivals in an attempt to reach agreements on how to maintain market share and avoid competing on price for many drugs. Price fixing and market allocation are illegal and violate antitrust laws. Top executives of these pharmaceutical companies, knowing that their conduct was illegal, allegedly coordinated their unlawful price increases through secret, informal industry gatherings and personal calls and text messages.
The attorneys general lawsuit is State of Connecticut et al. v. Aurobindo Pharma, et al., 3:16-cv-2056 and the Plaintiff states include: Connecticut, Delaware, Florida, Hawaii, Idaho, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Nevada, New York, North Dakota, Ohio, Pennsylvania, Virginia and Washington. While these states have already found evidence of broad, well-coordinated schemes against these six pharmaceutical manufacturers, their attorneys general have made clear that the investigation is continuing and includes more drugs and more pharmaceutical manufacturers.
More than 80 percent of all prescriptions dispensed in the United States are for generic drugs, which have been credited with saving consumers and taxpayers billions of dollars by introducing competing products into the market. Companies that conspire to fix prices for generic drugs in order to increase their profits must answer for the harm caused to the federal government, states and consumers.
Beasley Allen lawyers have handled a number of cases involving fraud, deceit and anticompetitive conduct within the pharmaceutical industry. If any of our readers are aware of these type of anticompetitive acts, contact Ali Hawthorne, a lawyer in our firm’s Consumer Fraud & Commercial Litigation Section, at 800-898-2034 or by email at Alison.Hawthorne@beasleyallen.com.
Sources: Law360.com and New York Times
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