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2016-12-15 18:22:18
20 States Accuse Generic Drug Companies of Price Fixing

The attorneys general in 20 states on Thursday accused six generic pharmaceutical companies, including the industry giants Teva and Mylan, of a scheme to artificially inflate the prices of an antibiotic and a diabetes drug.

The state officials said the charges were part of a broad investigation into potential price-fixing within the industry, suggesting that more charges could follow. The investigation, at the state and federal levels, has left a cloud of uncertainty over the industry, which has also been under a barrage of public criticism about its pricing methods.

The complaint filed Thursday describes a cozy industry culture marked by regular dinners and social outings that, the suit says, frequently crossed the line and violated antitrust rules. Generic drug makers that hoped to begin selling a new drug first sought out competitors, the suit said, in an attempt to reach an agreement on how they could avoid competing on price and keep market share.

“These agreements had the effect of artificially maintaining high prices for a large number of generic drugs and creating an appearance of competition when in fact none existed,” the lawsuit said.

The lawsuit names six companies, including Teva, the Israeli drugmaker that is the world’s largest manufacturer of generics, and Mylan, which came under intense criticism this year after it sharply raised prices on EpiPen, its severe allergy treatment. A spokeswoman for Teva said the company was still reviewing the complaint, and a spokeswoman for Mylan said the company knows of “no evidence that Mylan participated in price fixing.”

The suit focused on two drugs, the antibiotic treatment doxycycline and the diabetes drugs glyburide. But it added that the scheme went far beyond those two treatments and could include more drugs.

The lawsuit said the investigation began in July 2014 and was initiated by the state of Connecticut, which “uncovered evidence of a broad, well-coordinated and long-running series of schemes to fix the prices and allocate markets for a number of generic pharmaceuticals in the United States.”

On Wednesday, federal prosecutors made similar claims against two former executives at Heritage Pharmaceuticals, one of the companies named in the suit, accusing them of engaging in a price-fixing scheme for the same two drugs.

Heritage has blamed the activity on the two former executives, Jeffrey Glazer and Jason Malek, who were fired from the company in August. Heritage is also suing the two men, claiming that they “looted” tens of millions of dollars from the company.

Other companies named in the suit, including Aurobindo Pharma, Citron Pharma and Mayne Pharma, did not immediately reply to requests for comment.

“This is huge news,” said Michael A. Carrier, an antitrust professor at Rutgers Law School. He noted that the lawsuit was joined by Democratic and Republican attorneys general.

Generic drugs, he said, are supposed to bring drug prices down by introducing competing products once a product loses its patent protection.

“It blows that entire assumption out of the water,” he said, “when you hear that generic companies are getting together to increase prices.”