Teva starred in price-fixing scheme, but 19 other companies 'willingly' joined, attorneys general claim

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Connecticut Attorney General William Tong led a lawsuit filed by dozens of states against 20 generic drug makers for alleged price fixing. (Pixabay)

In what could be "the largest cartel case in the history of the United States," as Connecticut Attorney General William Tong called it, 44 states sued 20 generics makers on Friday for price fixing and personally named 15 of those companies' executives.

And at the center of it all, the lawsuit (PDF) said, was Teva Pharmaceutical.

At industry dinners, cocktail parties and outings—and in follow-up phone calls and texts—the companies divvied up markets and agreed on prices, the 524-page complaint alleges. And though Teva played a starring role, each of the other defendants “willingly participated” and “reaped substantial monetary rewards,” the suit claims.

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The suit names Maureen Cavanaugh, Teva's former senior vice president and chief commercial officer in North America, and three lower-level executives who no longer work at the company. Aside from Teva, the lawsuit implicates Novartis’ Sandoz unit, Mylan, Pfizer and several other leading generic drug makers. It names current and former executives from Lupin, Glenmark and other companies.  

RELATED: More states pour into generics price-fixing probe, suing Mylan, Teva and others

Teva stressed that the lawsuit just presents allegations at this point. "Teva continues to review the issue internally and has not engaged in any conduct that would lead to civil or criminal liability," a spokeswoman said. She added that the company will continue defending itself.

A Sandoz spokeswoman said the company believes the claims are “without merit and will vigorously contest them.” A spokeswoman for Pfizer said the company does "not believe the company or our colleagues participated in unlawful conduct" and denies any wrongdoing." The company will "vigorously defend against these claims," she added.

Wells Fargo analyst David Maris said the “penalties and damages are impossible to calculate, but could be material.” His team spoke with Tong’s office and learned that the attorney general Is “preparing for trial in these cases,” Maris wrote in a note to clients, and intends to “claw back all gains from collusion."
 
After five years of investigating, the states have identified more than 100 drugs for which they allege the defendants illegally divided up markets and fixed prices. In some cases, price hikes that stemmed from backroom conversations were above 1,000%, Tong said. The scheme covered a wide array of drug types and classes, including treatments for multiple sclerosis, HIV, ADHD and cancer.

The drugmakers' gains cost payers and consumers money, the states say, by thwarting billions of dollars in savings typically associated with generic drugs. 

The case could get even bigger down the line. A Connecticut assistant attorney general told The Washington Post in December the office was looking into 300 meds.

RELATED: Mylan President Rajiv Malik targeted as states expand price-fixing suit against top drugmakers 

It’s the second lawsuit filed by Connecticut's Office of Attorney General after Tong’s predecessor, George Jepsen, kicked off an investigation into suspicious generic price hikes way back in 2014. In 2016, dozens of states filed an initial complaint that Jepsen called the “tip of the iceberg” of the alleged scheme. 

In 2017, the states amended their complaint and targeted 18 companies and two individuals—Mylan president Rajiv Malik and Emcure CEO Satish Mehta—for collusion on 15 drugs. Aside from the state lawsuit, the Department of Justice has been investigating alleged generic pricing collusion.

If Teva ends up settling with the states, the dollar amount likely wouldn't be too big a burden, Credit Suisse analyst Vamil Divan, M.D., wrote in a Monday investor note. "While it is hard to quantify what Teva's potential liability could be at this point, we believe any potential settlement would be manageable for Teva and take into consideration the important role generic drugs play in managing drug spending in this country, as well as Teva's current debt load," Divan wrote.

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