BOSTON – Attorney General Maura Healey joined nearly every other state attorney general in filing a complaint in federal court late last week alleging that 20 drug manufacturers and 15 pharmaceutical company executives conspired to inflate the prices of more than 100 different generic drugs.
The complaint, which is being spearheaded by Connecticut Attorney General William Tong and was filed Friday in U.S. District Court of Connecticut, alleges that drug makers “actively worked together to coordinate and fix prices of more than 100 different medications that treat a wide array of conditions -- including diabetes, cancer, multiple sclerosis, HIV/AIDS, and epilepsy — and account for billions of dollars of sales in the United States.”
In some instances, the drug companies were able to drive up the price of a generic drug by more than 1,000 percent, the complaint alleges.
“Our case alleges that some of the largest generic drug manufacturers in the country actively conspired together to fix prices and profit as a result of their illegal scheme,” Healey said. “People depend on generic drugs to keep health care costs down and make medications more affordable. The actions by these companies are reprehensible, illegal, and betray the public’s trust.”
The corporate defendants in the case are: Teva Pharmaceuticals USA Inc.; Sandoz Inc.; Mylan Pharmaceuticals Inc.; Actavis Holdco US Inc.; Actavis Pharma Inc.; Amneal Pharmaceuticals Inc.; Apotex Corp.; Aurobindo Pharma USA Inc.; Breckenridge Pharmaceutical Inc.; Dr. Reddy’s Laboratories Inc.; Glenmark Pharmaceuticals Inc. USA; Greenstone LLC; Lannett Company Inc.; Lupin Pharmaceuticals Inc.; Par Pharmaceutical Companies Inc.; Pfizer Inc.; Taro Pharmaceuticals USA Inc.; Upsher-Smith Laboratories LLC; Wockhardt USA LLC; Zydus Pharmaceuticals (USA) Inc.
The suit seeks damages, civil penalties, disgorgement of any “ill-gotten” profits and “a permanent injunction preventing the Defendants from continuing their illegal conduct and remedying the anticompetitive effects caused by their illegal conduct.”
Massachusetts is one of 43 states that have signed onto the suit, as has Puerto Rico. Healey’s office said a similar lawsuit against six other pharmaceutical companies, which the attorney general joined in 2016, remains pending in U.S. District Court in the Eastern District of Pennsylvania.
The complaint also lists 15 individual defendants, mostly senior executives responsible for sales, marketing, pricing and operations at the drug manufacturers. The suit alleges that the executives “regularly conspired to allocate markets and raise prices through social and industry events, as well as through emails, telephone calls, and text messages.”
“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,” the complaint states. “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.”
Health care expenditures in Massachusetts totaled $61.6 billion in 2017, growth of 1.6 percent from the previous year, according to the Health Policy Commission. At 4.1 percent, pharmaceutical spending was among the fastest growing categories. Prescription drug spending at MassHealth has doubled over the past five years, growing at twice the rate of other MassHealth spending.
Lawmakers have tried to deal with the rising cost of prescription drugs and this session are pursuing drug pricing oversight through the state budget. Though there are differences between their approaches, the House, Senate and governor’s budgets would allow MassHealth to negotiate costs directly with pharmaceutical manufacturers and would establish a process to resolve disputes between regulators and manufacturers.
Proposals from Gov. Charlie Baker and the Senate would allow regulators to refer drug companies to the attorney general for resolution. The House’s process does not involve the attorney general.