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States: Drugmakers collude on generic price hikes, overcharge consumers and states billions

A coalition of attorneys general from 43 states and Puerto Rico filed a 510-page lawsuit last week at a U.S. District Court in Connecticut, claiming that “generic drug manufacturers conspired to fix prices and markets of 114 drugs for both minor infections and chronic diseases such as arthritis, cancer, diabetes and HIV.”1 The suit alleges that Teva, Pfizer, Mylan, and 17 other pharmaceutical companies (see below) worked together to create a “fair share” of the generic drug market and thereby avoid price-lowering competition. (Actavis Pharma, Amneal Pharmaceuticals, Apotex, Aurobindo Pharma U.S.A., Breckenridge Pharmaceutical, Dr. Reddy’s Laboratories, Glenmark Pharmaceuticals, Greenstone, Lannett Company, Lupin Pharmaceuticals, Par Pharmaceutical Companies, Sandoz, Taro Pharmaceuticals USA, Upsher-Smith Laboratories, Wockhardt USA and Zydus Pharmaceuticals.)

The lawsuit also names 15 pharma execs in a price-fixing conspiracy that allegedly overcharged states and consumers billions of dollars.1

Connecticut Attorney General William Tong said, “We have hard evidence that shows the generic drug industry perpetrated a multi-billion dollar fraud on the American people. We all wonder why our healthcare, and specifically the prices for generic prescription drugs, are so expensive in this country — this is a big reason why.”1

Indeed Congress has been attempting to lower drug prices via new policies, perhaps this is why they haven’t been successful?

Thanks to emails, text messages, phone records, and accounts from former company insiders showing how generic drugmakers were able to “fix prices and divide market share,”1 found by investigators, the picture of how companies and execs were able to communicate with one another- during industry dinners, lunches, cocktail parties, golf outings and other social events- directly in order to “divvy up customers to create an artificial equilibrium in the market”1 happened. And how, in turn, that kept generic drug prices artificially high. (The drug price hikes varied, in some cases exceeding 1,000%.)

Investigators from the Connecticut Attorney General’s office called the lawsuit the largest “cartel case in the history of the United States.”1

As just one example, Teva and other companies would lead and follow each others’ price increases. According to the suit, beginning in 2013 and going through January 2015, the company raised their prices on 112 different generic drugs and colluded with competitors on 86 of those price increases.

Teva has denied any wrongdoing and say they are reviewing the issue internally.

We will update you when the suit goes to trial.