Jepsen Expands Investigation Into 'Pervasive' Price-Fixing By Drug Companies

Connecticut and 45 other states are expanding their investigations into alleged conspiracy and price gouging by at least 18 generic drug companies, state Attorney General George Jepsen said Tuesday.

The latest legal actions include lawsuits against 12 additional drug companies — bringing the number of generic firms involved to 18. Jepsen said that, for the first time in the multi-state probe being led by his office, two drug company executives have been targeted as defendants in lawsuits.

Jepsen said the number of generic drugs involved in the investigations has also risen, from the original two medicines to 15. He said the collusion among companies increased some generic drug prices for consumers by as much as 1,000 percent.

Consumers “have been paying exorbitant prices they shouldn’t have to pay,” said Jepsen. He said many of the drugs involved provide “significant help to people to live.”

Generic drugs are a $75 billion-a-year industry in the U.S.

The original state lawsuits alleged that the companies involved “entered into illegal conspiracies in order to unreasonably restrain trade, artificially inflate and manipulate prices and reduce competition” for two drugs: doxycycline hyclate delayed-release, an antibiotic, and glyburide, an oral medication for diabetes.

“We allege in this [new] complaint that the defendant companies’ collusion was so pervasive that it essentially eliminated competition from the market for these 15 drugs in its entirety,” Jepsen said. “Every time we kick a door in, we make new discoveries.”

The U.S. Department of Justice also is conducting a criminal investigation into price fixing and conspiracy in the generic drug industry.

Previously, the lawsuit was filed against generic drug manufacturers Heritage Pharmaceuticals Inc., Aurobindo Pharma USA Inc., Citron Pharma LLC, Mayne Pharma (USA) Inc., Mylan Pharmaceuticals Inc. and Teva Pharmaceuticals USA Inc., alleging that they entered into illegal conspiracies in order to unreasonably restrain trade, artificially inflate and manipulate prices and reduce competition in the United States for doxycycline hyclate and glyburide.

The states are seeking to expand the complaint to include Actavis Holdco U.S. Inc.;, Actavis Pharma Inc., Ascend Laboratories LLC, Apotex Corp., Dr. Reddy's Laboratories Inc., Emcure Pharmaceuticals Ltd., Glenmark Pharmaceuticals Inc., Lannett Compan, Inc., Par Pharmaceutical Companies Inc., Sandoz, Inc.;,Sun Pharmaceutical Industries Inc. and Zydus Pharmacuticuals (USA) Inc.

According to the legal action filed in U.S. District Court in Pennsylvania, the state investigations were triggered by “skyrocketing” generic drug prices. The suit quotes generic industry officials as arguing the “significant price increases were due to a myriad of benign factors, such as industry consolidations, [federally] mandated plant closures, or elimination of unprofitable generic drug product lines.”

But the lawsuit filed by the states alleges that the real reason for those soaring generic prices was “illegal collusion” among those drug manufacturers.

State officials claim that top executives of various generic drug companies periodically get together for an “industry dinner” and share information. Some pharmaceutical sales representatives also meet for what are called in the business “Girls Night Out,” where they discuss sensitive information, according to the lawsuit.

The two drug executives named in the lawsuits are Rajiv Malik, president and executive director of Mylan N.V., the parent company of Mylan Pharmaceuticals Inc., and Satish Mehta, CEO and managing director of Emcure Pharmaceuticals Ltd., the parent company of Heritage Pharmaceuticals Inc.

“Mylan has deep faith in the integrity of its President, Rajiv Malik, and stands behind him fully," company officials said in a statement Tuesday.

Assistant Attorney General Joe Nielsen said the direct involvement of those two executives in the alleged misconduct was the reason they were specifically named as defendants. “The evidence [against them] … was significant,” Nielsen said.

“It is important for us to hold the individuals engaging in this conduct accountable,” Nielsen said. “There are a number of other executives we are investigating.”

Jepsen said the investigation and legal actions are “still in the very early stages” and could take years to reach a conclusion. He said the likelihood is that there will be a series of individual settlements with different companies rather than a massive industry-wide settlement.

According to Jepsen, the ongoing, complex generic drug investigation, together with multiple legal actions challenging Trump Administration environmental and health policies, has put a strain on his office resources.

“We are stretched pretty thin in this office,” Jepsen said. But he added that the new budget just passed by the General Assembly provides his office with $600,000 in additional funding to hire four new staff members and another $100,000 in increased expense money to help cover the increasing legal costs.


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