‘Too big to care’: Sweeping lawsuit accuses Teva of colluding with other generic makers to keep prices high

Teva has been accused of being a ringleader in a massive price-fixing conspiracy alongside 19 other generic drugmakers in the US, causing price spikes of as much as 1000% from 2013 to 2015, according to an antitrust lawsuit filed by 44 states.

The lawsuit, which also names 15 individuals, is the second to be filed in an “ongoing, expanding investigation” on the generic drug industry — “the largest private sector corporate cartel in history” according to Connecticut attorney general William Tong. Under his predecessor, the state teamed up with a fewer number of states in 2016 to sue some of the same companies over two drugs. Today, the list has grown to 114.

And counting. A Connecticut prosecutor leading the probe told the Washington Post in December that his team is now looking at 300 drugs.

William Tong

While the generic drug market was designed to bring prescription prices down, the accused companies — Mylan, Glenmark, Sandoz, Actavis and the like — consistently coordinated among themselves to keep them up for a bigger profit, prosecutors alleged.

Their scheme, in a nutshell:

Rather than enter a particular generic drug market by competing on price in order to gain market share, competitors in the generic drug industry would systematically and routinely communicate with one another directly, divvy up customers to create an artificial equilibrium in the market, and then maintain anticompetitively high prices. This ‘fair share’ understanding was not the result of independent decision making by individual companies to avoid competing with one another. Rather, it was a direct result of specific discussion, negotiation and collusion among industry participants over the course of many years.

To make matters worse, the lawsuit stated in brief sections titled “spoliation of evidence” and “obstruction of justice,” company execs began talking to each other and deleting texts and emails once they learned about the investigation.

As generics account for 90% of prescriptions dispensed in the US, this is an issue that affects every American, Tong said in an interview with CBS60 Minutes. For a visual illustration, he raised a bottle of doxycycline, an antibiotic he takes daily. The drug is one of many whose prices increased over the past years due to the scheme, making him “one of the victims.”

Bill Whitaker

The effect of that, he said in response to a question from Bill Whitaker, is “devastating.”

“It affects health insurance premiums and health insurance plans. It impacts Medicare and Medicaid,” he told the host. “And it is a chain reaction that drives up the price of American healthcare to unnatural heights.” He went on to say the companies were “too big to care.”

Teva, which saw its shares $TEVA drop 13% to $12, denied the allegations, as did Pfizer, according to statements quoted by Reuters and the New York Times. Meanwhile, Novartis vowed to “vigorously contest” the claims against Sandoz.

Vamil Divan of Credit Suisse sees the complaint — regardless of the merits of the case — reading negatively for Teva, as it might lead to some sort of financial settlement. But it would be “manageable” for the company even as it struggles with plunging revenue and declining stock, taking into consideration “the important role generic drugs play in managing drug spending in this country, as well as Teva’s current debt load.”

The Association for Accessible Medicines, an industry lobbying group, responded to the 60 Minutes segment by reiterating its general condemnation of illegal behaviors but emphasizing the savings that generics bring compared to their branded counterparts.

“Today’s generic drug industry is characterized by intense competition,” the statement read. “As a result, pricing data from the last three years indicate that generic prices have declined overall and saved patients and taxpayers literally billions of dollars compared to brand-name drug prices.”

The best place to read Endpoints News? In your inbox.

Comprehensive daily news report for those who discover, develop, and market drugs. Join 51,200+ biopharma pros who read Endpoints News by email every day.

Free Subscription

VP Oncology Biology
Skyhawk Therapeutics Waltham, MA
Associate Director CMC
Elektroki Boston, MA
Director Process Development
Elektroki Boston, MA
Research Scientist - Immunology
Recursion Pharmaceuticals Salt Lake City, UT

Visit Endpoints Careers ->