Overview

44 states filed a lawsuit alleging that 20 major drug manufacturers conspired to artificially inflate the prices of more than 100 generic drugs. These drugs include treatments for cancer, HIV, diabetes, epilepsy, and depression. 

The complaint alleges that the firms schemed to increase prices affecting Medicare and Medicaid, the health insurance market, and individuals. The lawsuit also includes 15 senior executive defendants responsible for sales, marketing, pricing, and operations. 

The complaint also alleges that company representatives regularly met during cocktail parties and other social functions and discussed competitively sensitive information to effect the avoidance of price competition. 

The complaint puts Teva at the center of the conspiracy, saying it colluded with a core group of competitors to follow each other’s price increases. During a 19-month period from 2013 to 2015, Teva significantly raised prices on about 112 generic drugs and colluded with its competitors on at least 86 medicines, the states said. While the size of the increases varied, some were more than 1,000%.

The lawsuit seeks damages, civil penalties, and court actions to restore competition ot the generic drug market. Prior to this development, a complaint was filed in 2016 in the US District Court in the Eastern District of Pennsylvania. In that case, two leading executives of Heritage Pharmaceuticals entered pleas with the US Department of Justice. 

Connecticut Attorney General William Tong is leading the coalition of states. 

Respondent Pharmaceutical Companies

The 20 firms that are respondents to the suit include leading generic drug manufacturers based in the United States, namely: 

1. Teva Pharamaceuticals USA, Inc. 
2. Actavis Holdco US, Inc. 
3. Actavis Pharma, Inc. 
4. Amneal Pharmaceuticals, Inc. 
5. Apotex Corp., 
6. Aurobindo Pharma USA, Inc. 
7. Breckenridge Pharmaceutical, Inc.
8. Dr. Reddy’s Laboratories, Inc. 
9. Glenmark Pharmaceuticals, Inc., USA, 
10. Greenstone LLC
11. Lannet Company, Inc. 
12. Lupin Pharmaceuticals, Inc. 
13. Mylan Pharmaceuticals, Inc. 
14. PAR Pharmaceutical Companies, Inc. 
15. Pfizer, Inc. 
16. Sandoz, Inc., 
17. Taro Pharmaceuticals USA, Inc. 
18. Upsher-Smith Laboratories, LLC.
19. Wockhardt USA LLC
20. Zydus Pharmaceuticals (USA), Inc. 

Respondent Pharmaceutical Executives

Included in the complaint are 15 executives of the pharmaceutical companies, namely:

1. Ara Aprahamian
2. David Berthold
3. James Brown
4. Maureen Cavanaugh
5. Tracy Sullivan Divalerio
6. Marc Falkin
7. James Grauso
8. Kevin Green
9. Armando Kellum
10. Jill Lailor
11. James Nesta
12. Nisha PAtel
13. Konstantin Ostaficiuk
14. David Rekenthaler
15. Richard Rogerson

Drugs Implicated in the Suit

The suit alleges that generic manufacturers replaced competition with coordination in order to maintain their fair share of a given generic drug market and avoid price erosion. The structure and inner workings of the agreement were well understood and adopted throughout the industry. The following drugs are implicated in an overarching conspiracy during the 2000s:

1. Fenofibrate—also known by brand names such as Tricor—is a medication used to treat cholesterol conditions by lowering “bad” cholesterol and fats (such as LDL and triglycerides) and raising “good” cholesterol (HDL) in the blood. 
2. Clonidine-TTS Patch—also known by the brand name Catapres-TTS —is a medication in the form of a transdermal patch that is used to treat high blood pressure. 
3. Tolterodine Extended Release (ER) – also known as Detrol LA – is a medication used for the treatment of an overactive bladder
4. Capecitabine, also known as Xeloda, is an anti-cancer chemotherapy drug used to treat a variety of cancers, including breast and colon cancer.
5. Portia and Jolessa – Ethinyl estradiol and levonorgestrel, when used in combination, is an oral contraceptive used to prevent pregnancy. During the relevant time period, both Teva and Sandoz marketed ethinyl estradiol and levonorgestrel under multiple names – including both Portia and Jolessa. 
6. Temozolomide, also known by the brand name Temodar, is used to treat glioblastoma multiforme and refractory anaplastic astrocytoma, both cancers of the brain. 
7. Tobramycin, also known by the brand name Tobi, is an eye drop used to treat bacterial infections.
8. Dexmethylphenidate HCL Extended Release – a generic version of Focalin, and it is used to treat attention deficit hyperactivity disorder (ADHD)
9. Lamivudine/Zidovudine, also known by the brand name Combivir, is a combination of medications used in the treatment of human immunodeficiency virus (HIV) infection. This combination of drugs is often prescribed to decrease the chances that an HIV-positive patient will develop acquired immunodeficiency syndrome (AIDS) or other related illnesses.
10. Irbesartan is a drug used in the treatment of hypertension. It prevents the narrowing of blood vessels, thus lowering the patient’s blood pressure. Irbesartan is also known by the brand name Avapro®. 
11. Drospirenone and ethinyl estradiol (Ocella®) is a pair of drugs used in combination as an oral contraceptive
12.  Norethindrone/ethinyl estradiol, also known by the brand name Ovcon®35, is a combination of medications used as an oral contraceptive. Teva markets its generic version of this combination medication under the name Balziva®. 
13. Oxaprozin (Daypro), is a nonsteroidal anti-inflammatory drug. It is used to treat rheumatoid arthritis, osteoarthritis, and juvenile rheumatoid arthritis. 
14. Tolterodine Tartrate, also known as Detrol, is an antispasmodic drug used to treat an overactive bladder by improving the ability to control urination
15. Piroxicam is a nonsteroidal anti-inflammatory drug. 
16. Cabergoline (Dostinex) is used to treat medical problems that occur when too much of the hormone prolactin is produced. 
17. Amphetamine/Dextroamphetamine Extended Release, also known by the brand name Adderall XR®, is a medication used in the treatment of attention deficit hyperactivity disorder (ADHD). 
18. Amphetamine/Dextroamphetamine Immediate Release (Adderall IR®) is a medication used to treat ADHD. 
19. Dextroamphetamine Sulfate Extended Release, also known by the brand name Dexedrine® and sometimes referred to as “Dex Sulfate XR,” is a medication used to stimulate the central nervous system in the treatment of hyperactivity and impulse control. 
20. Budesonide Inhalation, also known by the brand name Pulmicort Respules®, is an anti-inflammatory steroid, administered through inhalers or similar devices, used to prevent asthma attacks
21. Celecoxib, also known by the brand name Celebrex®, is a nonsteroidal anti inflammatory medication used in the treatment of pain and inflammation associated with arthritis, juvenile rheumatoid arthritis, and other disorders.  
22. Omega-3-Acid Ethyl Esters (Lovaza) is a lipid-regulating agent used to lower the levels of triglycerides. 
23. Entecavir, also known by the brand name Baraclude, is a medication used to treat chronic Hepatitis B.
24. Budesonide DR Capsules, also known by the brand name Entocort EC, is a steroid used to treat Crohn’s disease and ulcerative colitis when taken orally. 
25. Enalapril Maleate (“Enalapril”), also known by the brand name Vasotec®, is a drug used in the treatment of high blood pressure and congestive heart failure
26. Nortriptyline Hydrochloride (“Nortriptyline”), also known by the brand name Pamelor, is a drug used to treat depression. 
27. Paricalcitol, also known by the brand name Zemplar, is used to treat and prevent high levels of parathyroid hormone in patients with long-term kidney disease.
28. Niacin Extended Release (“ER”), also known by the brand name Niaspan Extended Release, is a medication used to treat high cholesterol.
29. Etodolac Extended Release (“Etodolac ER”) is a nonsteroidal anti-inflammatory drug that is used to treat symptoms of juvenile arthritis, rheumatoid arthritis, and osteoarthritis.
30. Moexipril Hydrochloride (Univasc) is a part of a class of drugs used to treat high blood pressure. 
31. Desogestrel/Ethinyl Estradiol (Kariva) is a combination pill with progestin and estrogen used as an oral contraceptive. 
32. Gabapentin (Neurontin) is used to treat epilepsy and neuropathic pain. 
33. Baclofen (Gablofen and Lioresal) is a muscle relaxant used to treat muscle spasms associated with multiple sclerosis and spinal cord injury or disease. 
34. Norethindrone Acetate, also known by the brand name Primolut-Nor among others, is a female hormone used to treat endometriosis, uterine bleeding caused by abnormal hormone levels, and secondary amenorrhea.  
35. Oxaprozin, also known by the brand name Daypro, is a non-steroidal antiinflammatory drug (NSAID) indicated for the treatment of signs and symptoms of osteoarthritis and rheumatoid arthritis. 
36. Paricalcitol, also known by the brand name Zemplar, is used to treat and prevent high levels of parathyroid hormone in patients with long-term kidney disease. 

By 2012-2014, manufacturers began to focus more on price increases than they had in the past. They were no longer satisfied to simply maintain stable prices – there was a concerted effort by many in the industry to significantly raise prices. Starting sometime in 2012 or even earlier, and continuing for several years, competitors would systematically communicate with each other as they were identifying opportunities and planning new price increases, and then again shortly before or at the time of each increase. 

The full list of drugs implicated during this time, according to the suit is as follows:

1. Adapalene Gel Amiloride HCL/HCTZ Tablets 
2. Amoxicillin/Clavulanate Chewable Tablets
3. Amphetamine/Dextroamphetamine ER (aka Mixed Amphetamine Salts)
4. Amphetamine/Dextroamphetamine IR 
5. Azithromycin Oral Suspension 
6. Azithromycin Suspension
7. Baclofen Tablets 
8. Bethanechol Chloride Tablets 
9. Budesonide DR Capsules 
10. Budesonide Inhalation 
11. Bumetanide Tablets 
12. Buspirone Hydrochloride Tablets 
13. Cabergoline 
14. Capecitabine 
15. Carbamazepine Chewable Tablets 
16. Carbamazepine Tablets 
17. Cefdinir Capsules 
18. Cefdinir Oral Suspension 
19. Cefprozil Tablets 
20. Celecoxib 
21. Cephalexin Suspension 
22. Cimetidine Tablets 
23. Ciprofloxacin HCL Tablets 
24. Clarithromycin ER Tablets 
25. Clemastine Fumarate Tablets 
26. Clonidine TTS Patch 
27. Clotrimazole Topical Solution 
28. Cyproheptadine HCL Tablets 
29. Desmopressin Acetate Tablets 
30. Desogestrel/Ethinyl Estradiol Tablets (Kariva) 
31. Dexmethylphenidate HCL ER Capsules 
32. Dextroamphetamine Sulfate ER 
33. Diclofenac Potassium Tablets 
34. Dicloxacillin Sodium Capsules 
35. Diflunisal Tablets 
36. Diltiazem HCL Tablets 
37. Disopyramide Phosphate Capsules 
38. Doxazosin Mesylate Tablets 
39. Drospirenone and ethinyl estradiol (Ocella) 
40. Enalapril Maleate Tablets 
41. Entecavir 
42. Epitol Tablets 
43. Estazolam Tablets 
44. Estradiol Tablets 
45. Ethinyl estradiol and levonorgestrel (Portia and Jolessa) 
46. Ethosuximide Capsules 
47. Ethosuximide Oral Solution 
48. Etodolac ER Tablets 
49. Etodolac Tablets 
50. Fenofibrate 
51. Fluconazole Tablets 
52. Fluocinonide Cream
53. Fluocinonide Emollient Cream 
54. Fluocinonide Gel 
55. Fluocinonide Ointment 
56. Fluoxetine HCL Tablets 
57. Flurbiprofen Tablets 
58. Flutamide Capsules 
59. Fluvastatin Sodium Capsules 
60. Gabapentin Tablets 
61. Glimepiride Tablets 
62. Griseofulvin Suspension 
63. Hydroxyurea Capsules 
64. Hydroxyzine Pamoate Capsules 
65. Irbesartan 
66. Isoniazid 
67. Ketoconazole Cream 
68. Ketoconazole Tablets 
69. Ketoprofen Capsules 
70. Ketorolac Tromethamine Tablets 
71. Labetalol HCL Tablets 
72. Lamivudine/Zidovudine (generic Combivir) 
73. Loperamide HCL Capsules 
74. Medroxyprogesterone Tablets 
75. Methotrexate Tablets 
76. Mimvey (Estradiol/Norethindrone Acetate) Tablets 
77. Moexipril HCL Tablets 
78. Moexipril HCL/HCTZ Tablets 
79. Nabumetone Tablets 
80. Nadolol Tablets 
81. Niacin ER Tablets 
82. Nitrofurantoin MAC Capsules 
83. Norethindrone/ethinyl estradiol (Balziva) 
84. Norethindrone Acetate 
85. Nortriptyline Hydrochloride Capsules 
86. Omega-3-Acid Ethyl Esters 
87. Oxaprozin Tablets 
88. Oxybutynin Chloride Tablets 
89. Paricalcitol 
90. Penicillin VK Tablets 
91. Pentoxifylline Tablets 
92. Piroxicam 
93. Pravastatin Sodium Tablets 
94. Prazosin HCL Capsules 
95. Prochlorperazine Tablets 
96. Propranolol HCL Tablets 
97. Raloxifene HCL Tablets 
98. Ranitidine HCL Tablets
99. Tamoxifen Citrate Tablets 
100. Temozolomide 
101. Tobramycin 
102. Tolmetin Sodium Capsules 
103. Tolterodine ER 
104. Tolterodine Tartrate 
105. Topiramate Sprinkle Capsules 
106. Warfarin Sodium Tablets

Violated Laws

The complaint alleges that the firms jointly violated Section 1 of the Sherman Antitrust Act of 1890 (26 Stat. 209, 15  U.S.C. §§ 1–7, which states that:

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.

Section 1 of the Sherman Antitrust Act prohibits agreements in restraint of trade–such as price-fixing, refusals to deal, bid-rigging, etc. The parties involved might be competitors, customers, or a combination of the two. Although the law states that “every contract, combination,… or conspiracy in restraint of trade… is declared to be illegal”, it has been interpreted by the courts to mean every contract, combination, or conspiracy unreasonably in restraint of trade. The courts have come to judge violations of Section 1 of the Sherman Act by two approaches:

• The per se approach generally includes direct price-fixing and bid-rigging. Per se basically means that the courts have found a certain action to always be harmful and therefore it must only be proved that the defendant has committed the action to find him guilty.
• The rule of reason approach weighs the reasons a certain action was taken and the economic benefits and costs of that action before coming to a judgement on its legality.

https://assets.documentcloud.org/documents/5997883/GENERIC-DRUGS-COMPLAINT.pdf

https://www.documentcloud.org/documents/5997883-GENERIC-DRUGS-COMPLAINT.html

http://economics.fundamentalfinance.com/sherman-act.php

https://www.bloomberg.com/news/articles/2019-05-10/teva-among-generic-drugmakers-sued-in-state-price-fixing-case

https://edition.cnn.com/2019/05/13/health/generic-drug-price-lawsuit-bn/index.html