Generic Drugmakers Colluded to Jack Up Prices: Lawsuit

Michael Rainey
Forty-three states are suing some of the largest generic drug manufacturers in the U.S., accusing them of conspiring to inflate prices for more than 100 widely-used medications, including antibiotics and treatments for arthritis, depression, high cholesterol, diabetes and cancer.Connecticut Attorney General William Tong said that the firms worked together to raise prices on similar drugs while agreeing to maintain market share and avoid competing on price. As a result of what Tong called “an industry-wide conspiracy,” prices for many generic drugs skyrocketed. In one year alone, between July 2013 and July 2014, the “prices of more than 1,200 generic medications increased an average of 448 percent,” the suit says. Some individual drug prices rose by more than 1,000%. (The 524-page lawsuit filed Friday is available here.) Some key details from the suit: * The drugs named in the suit produce billions of dollars in sales annually, in a generics market worth $100 billion. * Most of the collusive activity occurred between July 2013 and January 2015, but the pricing effects persist. * Medicare and Medicaid, health insurers and individuals were all affected.   * The 20 companies named in the suit include Teva, Novartis, Sandoz, Mylan and Pfizer. * The suit also names 15 individual executives at the firms responsible for sales, marketing, pricing and operations. * The accused companies have denied the charges.Tong told CBS News’ “60 Minutes” on Sunday that this may be the largest case involving a cartel in U.S. history. He also said that, in his view, the drugmakers were “too big care” about hurting consumers in a market in which “there’s just too much money to be made.”Tong said that state prosecutors have hard evidence to back up their claims: "We have emails, text messages, telephone records, and former company insiders that we believe will prove a multi-year conspiracy to fix prices and divide market share for huge numbers of generic drugs.” The documents, Tong said, show that the enormous price hikes on generic drugs American consumers have been dealing with had nothing to do with market forces or product shortages. Instead, Tong said, “It was about profit. It was about cold, hard greed.”Like what you're reading? Sign up for our free newsletter.

Forty-three states are suing some of the largest generic drug manufacturers in the U.S., accusing them of conspiring to inflate prices for more than 100 widely-used medications, including antibiotics and treatments for arthritis, depression, high cholesterol, diabetes and cancer.

Connecticut Attorney General William Tong said that the firms worked together to raise prices on similar drugs while agreeing to maintain market share and avoid competing on price. As a result of what Tong called “an industry-wide conspiracy,” prices for many generic drugs skyrocketed. In one year alone, between July 2013 and July 2014, the “prices of more than 1,200 generic medications increased an average of 448 percent,” the suit says. Some individual drug prices rose by more than 1,000%. (The 524-page lawsuit filed Friday is available here.)

Some key details from the suit:

  • The drugs named in the suit produce billions of dollars in sales annually, in a generics market worth $100 billion.
  • Most of the collusive activity occurred between July 2013 and January 2015, but the pricing effects persist.
  • Medicare and Medicaid, health insurers and individuals were all affected.  
  • The 20 companies named in the suit include Teva, Novartis, Sandoz, Mylan and Pfizer.
  • The suit also names 15 individual executives at the firms responsible for sales, marketing, pricing and operations.
  • The accused companies have denied the charges.

Tong told CBS News’ “60 Minutes” on Sunday that this may be the largest case involving a cartel in U.S. history. He also said that, in his view, the drugmakers were “too big care” about hurting consumers in a market in which “there’s just too much money to be made.”

Tong said that state prosecutors have hard evidence to back up their claims: "We have emails, text messages, telephone records, and former company insiders that we believe will prove a multi-year conspiracy to fix prices and divide market share for huge numbers of generic drugs.” The documents, Tong said, show that the enormous price hikes on generic drugs American consumers have been dealing with had nothing to do with market forces or product shortages. Instead, Tong said, “It was about profit. It was about cold, hard greed.”

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