Schuette Expands Scope of Generic Drug Lawsuit to Include More Manufacturers, Senior Execs
released on October 31, 2017
found in newsletter: October 2017
LANSING – Michigan Attorney General Bill Schuette today announced that he and the 45 other state Attorneys General that are taking part in a wide-ranging multistate antitrust investigation of the generic drug industry have asked a U.S. District Court in Connecticut 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 in the case and the number of drugs at issue in the litigation 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.
“We place our trust in pharmaceutical manufacturers to provide quality products at reasonable, market rate prices,” said Schuette. “It however appears that a conspiracy to increase costs above market rate occurred, and that doesn’t help those suffering from sudden illness or infection or just trying to maintain their life while coping with a long term disease. This doesn’t work for the residents of Michigan, and I will continue to hold these companies accountable for their actions.”
Schuette and 20 other state Attorneys General originally joined the suit in March of 2017.
Background on Lawsuit
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 competitor 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 in order 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, used to treat glaucoma and epilepsy;
Doxycycline monohydrate, an antibiotic;
Fosinopril-hydrochlorothiazide, used to treat high blood pressure;
Glipizide-metformin, a diabetes medication;
Glyburide-metformin, a diabetes medication;
Leflunomide, used to treat rheumatoid arthritis;
Meprobamate, an anxiety medication;
Nimodipine, a calcium channel blocking agent used to reduce problems caused by a bleeding blood vessel in the brain;
Nystatin, an antifungal medication;
Paromomycin, an antibiotic used to treat certain parasite infections;
Theophylline, used to treat asthma and other lung problems;
Verapamil, used to treat hypertension; and
Zoledronic acid, used to treat hypercalcemia.
The lawsuit is currently pending as part of the multidistrict litigation in the U.S. District Court for the Eastern District of Pennsylvania. The lawsuit was filed under seal in the U.S. District Court for the District of Connecticut. Portions of the complaint are redacted in order to avoid compromising the ongoing investigation.
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 healthcare 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 healthcare 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 percent of all prescriptions written in the United States.
Original Press Release