Attorneys general bring another ‘collusion’ case against generic makers, naming Novartis and Pfizer among over a dozen others
For the third time in the last four years, a coalition of attorneys general have filed an antitrust lawsuit against some of the world’s largest generic drugmakers, including Pfizer, Mylan and Novartis’ Sandoz unit, alleging that for years the companies fixed prices and manipulated the market for over 80 drugs.
The suit, brought by 51 attorneys general — including those of DC and every state besides California, Utah, South Dakota and Wyoming — is the latest bramble in a legal thicket that has ensnared the generics industry since 2016, when 20 state attorneys general accused Teva Pharmaceuticals and Mylan for an antibiotic and a diabetes drug. “We believe that this is just the tip of the iceberg,” then-Connecticut Attorney General George Jepsen said at the time.
Since then, generics companies have found themselves at odds not only with state attorneys, who filed another suit in 2019, but also federal investigators, who have successfully prosecuted criminal charges against at least two generics makers. In March, Sandoz pleaded guilty to fixing the price of critical drugs from 2013 to 2015 and agreed to pay $195 million. Heritage Pharmaceuticals and Rising Pharmaceuticals entered into similar agreements.
The latest suit lists 20 different drugmakers and several individuals and focuses on the market for generic topical products, where from “at least” 2009 to 2016, they write, “collusion has been rampant.” This segment of the industry, the suit alleges, was particularly illustrative of the larger generic industry’s “overarching understanding” to avoid competition and instead have each company settle for a “fair share” of the market, allowing them to then raise prices without fear of being undercut.
Specifically, it alleges that the largest topical makers Taro, Perrigo, Avectis and Sandoz (then known as Fougero) had long-standing agreements to avoid completion and mimic each other’s price increases.
“In order to maintain these unlawful agreements, the competitors stayed in nearly constant communication — meeting regularly at trade shows and customer conferences and communicating frequently by phone and text message to reinforce their understandings,” the attorneys general write. Other companies also “understood the rules of the road and took the necessary steps to limit competition.”
In an emailed statement, Novartis spokesperson Eric Althoff said the allegations were “overly broad” and not supported by the individual instances of misconduct Sandoz pleaded to in the federal case this year.
“The individual instances of misconduct at the core of the resolution we reached with the U.S. Department of Justice in March do not support the vast, systemic conspiracy the States allege,” he said. “We take seriously our compliance with antitrust laws, and we will continue to defend ourselves in this matter.”
Pfizer said Greenstone, their generics subsidiary, will defend the charges “vigorously.”
“As we have previously stated in response to the States’ May 2019 complaint, we do not believe that the Company or our colleagues participated in unlawful conduct,” a spokesperson said in an emailed statement. “The claims and allegations in the States’ most recent complaint do not change that belief.”