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Generic Drug Antitrust Litigation
In 2014, the Department of Justice began an investigationinto the pricing of various generic pharmaceuticals.In particular, the DOJ has been investigatingprice fixing and market allocation agreementsinvolving numerous generic pharmaceutical products,including doxycycline, an antibiotic, and glyburide,a treatment for diabetes. Many drug companies,including Teva, Mylan, Heritage Pharmaceuticals,Dr. Reddy’s, and Allergan, have been the subject ofthe investigation. The DOJ investigation has grownand presently includes at least 16 companies and300 drugs, plus almost every state attorney generaland federal law enforcement. In early 2017, JeffreyGlatzer and Jason Malek, two executives of HeritagePharmaceuticals, the company that was the focus of
the initial investigation, pleaded guilty to fixing prices for two generic drugs, doxycycline and glyburide, and agreed to cooperate.
In the wake of the Federal investigation, the state attorneys’ general of 47 states brought a civil action alleging price fixing, market division, and other antitrust violations by 16 defendant pharmaceutical companies related to fifteen (15) generic prescription drugs. As alleged, Defendants’ anticompetitive conduct falls principally into two categories, First, to avoid competing with one another and thus eroding the prices for a myriad of generic drugs, Defendants — either upon their entry into a given generic market or upon the entry of a new competitor into that market — communicated with each other to determine and agree on how much market share each would control and which customers each competitor was entitled to.
The defendant pharmaceutical companies then implementedthe agreement by either refusing to bidfor particular customers or by providing a cover bidthat they knew would not be successful. Second,and often in conjunction with the market allocationschemes, competitors in a particular market communicated— either in person, by telephone, or bytext message — and agreed to collectively raise and/or maintain prices for a particular generic drug. Thecomplaint sets forth detailed allegations of the antitrustconspiracy, including that deals were negotiatedby phone, email, and text, and at industry functions.Pharmaceutical sales reps would attend “girls’ nightsout” — ostensibly events for women in the industry— and discuss sensitive information, according tothe states. Based on this wrongdoing, the complaintalleges causes of action under the Federal antitrustlaws, under state antitrust laws, under state consumerprotection statutes, and common law. See In Re: GenericPharmaceuticals Pricing Antitrust Litigation, Casenumber 2:16-md-02724, in the U.S. District Court forthe Eastern District of Pennsylvania.
Many, if not the majority of cities, counties, and municipalities“self-insure,” meaning that they themselvespay the costs of medical care and pharmaceuticals fortheir employees and dependents. Put simply, theselocal government bodies themselves pay for or reimbursethe costs of medical care, including prescriptiondrugs. As demonstrated by the various lawsuits beingbrought against many pharmaceutical companies thatmanufacture generic drugs, these costs have been inflated– often thousand-fold — by, for example, pricefixing, agreements to divide markets, agreements tomaintain minimum pricing, and other unlawful antitrustconspiracies. Cities, counties and municipalitiesmay want to consider, with the help of experiencedcounsel, bringing antitrust actions against the guiltypharmaceutical manufacturers similar to thosebrought by the states, and thereby recover the potentiallyhundreds of millions in not billions of dollarsthey have over-expended on prescription drugs.
In addition to the action brought by the states, numeroushealth care plans, welfare benefit funds, privateinsurers, and other health coverage providers havebrought suit, including Humana and UnitedHealthCare. These “end payor plaintiffs” seek to likewiserecover the hundreds of millions, if not billions theyhave overpaid for generic prescription drugs as a resultof the alleged antitrust conspiracy. Both the actionbrought by the states, and these various other actions,have been consolidated by the Panel on MultidistrictLitigation in one forum, specifically in the Eastern District
