Generic Drug Companies Face Price-Fixing Charges
After a two year investigation, twenty state attorneys general recently filed a lawsuit against six generic drug companies, alleging that they colluded to fix prices and allocate markets for two generic drugs: doxycycline hyclate delayed release, an antibiotic, and glyburide, an oral diabetes medication. The generic companies named are Heritage Pharmaceuticals Inc., Aurobindo Pharma USA Inc., Citron Pharma LLC, Mayne Pharma Inc., Mylan Pharmaceuticals Inc. and Teva Pharmaceuticals USA Inc.
The civil case, filed in federal court in Connecticut, came one day after the U.S. Department of Justice filed criminal charges against Heritage’s former chief executive officer and former president for their roles in conspiracies to allocate customers and fix prices for the same two drugs.
The states’ complaint alleges that drug-manufacturer executives had several opportunities for collusion at industry trade shows, conferences, and dinners, where they discussed upcoming bids, pricing strategies, and other sensitive information. The complaint further alleges that employees from the generic companies knew that their conduct was illegal and made overt efforts to conceal the alleged collusion, either deleting emails and text messages or avoiding communicating with each other in writing.
The cases are part of a broader, ongoing investigation into generic drug pricing taking place at the state and federal levels, as well as in Congress. The investigations were initiated as a result of dramatic price increases – in some cases up to 1,000% or more – of certain generic drugs. Connecticut’s investigation, which is still ongoing, began in July 2014 and uncovered evidence of a “broad, well-coordinated” scheme for a number of generic drugs. The Justice Department, which has sent subpoenas to several generic companies seeking information related to product pricing, is also expected to continue its investigation.
Faruqi & Faruqi has recently filed several cases against generic drug manufacturers alleging anticompetitive conspiracies surrounding a number of generic drugs. In June 2016, Faruqi & Faruqi filed a case against generic drug manufacturers in Pennsylvania federal court for allegedly conspiring to increase the price of two generic drugs: digoxin and doxycycline IR. The digoxin/doxycycline case alleges that the significant price increases of the drugs were the product of defendants’ conspiracy to fix prices and allocate markets, and as a result direct purchasers of the drugs have paid and continue to pay supracompetitive prices. More recently, in December 2016, Faruqi & Faruqi filed a number of similar cases on additional generic drugs, including divalproex ER, desonide, pravastatin, econazole, fluocinonide, levothyroxine, propranolol, and clobetasol. The cases were filed in federal court in Pennsylvania.
About Faruqi & Faruqi, LLP
Faruqi & Faruqi focuses on complex civil litigation, including securities, antitrust/pharmaceutical, consumer and employment class actions as well as shareholder derivative and merger and transactional litigation. The firm is headquartered in New York, and maintains offices in Pennsylvania, Delaware and California. The firm is counsel for the class in the Digoxin, Doxycycline, Divalproex ER, Desonide, Pravastatin, Econazole, Fluocinonide, Levothyroxine, Propranolol, and Clobetasol actions.
Since its founding in 1995, Faruqi & Faruqi has served and/or is currently lead or co-lead counsel in numerous high-profile cases which ultimately provided or will lead to significant recoveries to investors, direct purchasers, consumers and employees.
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About Kristyn Fields
Kristyn Fields is a law clerk in Faruqi & Faruqi, LLP’s New York office. She practices in the area of antitrust litigation with a focus on competition in the pharmaceutical industry.