States sue generic drug companies for price fixing

Last Wednesday twenty state Attorneys General filed suit against six drug companies for fixing prices of generic drugs. Seven ERC states are included in the lawsuit including Connecticut, Delaware, Maine, Maryland, Maine, New York and Pennsylvania. The six drug companies include Mylan Pharmaceuticals, Aurobindo, Citron Pharma, Heritage Pharmaceuticals, Mayne Pharma and Teva Pharmaceutical. The suit was filed one day after charges were filed against two former Heritage executives. Almost 90% of prescriptions are for generic drugs which are intended to be lower cost alternatives to brand name medications. However recently prices for many generics have risen sharply. The lawsuit charges the companies “with entering into contracts, combinations and conspiracies that had the effect of unreasonably restraining trade, artificially inflating and maintaining prices and reducing competition”. Over the last several years, . . . prices for dozens of generic drugs have uncharacteristically risen — some have skyrocketed — for no apparent reason, sparking outrage from public officials, payers and consumers across the country whose costs have doubled, tripled or in some cases increased up to 1,000% or more.” Sharp price increases led the state of Connecticut to initiate an investigation in July 2014, followed by Congressional inquiry and a federal grand jury. The lawsuit outlines how the companies coordinated prices and limited competition through “regular ‘industry dinners’, ‘girls nights out’, lunches, parties, and numerous and frequent telephone calls, emails and text messages.”