States follow feds with accusations of generic price fixing against Mylan, Heritage, others

none
Twenty states have filed suit against 6 generic drug makers for allegedly fixing the price on two drugs.

Generic drugmakers have received yet another holiday surprise. Just a day after federal authorities released the initial salvo into an alleged price-fixing scheme by charging two former Heritage Pharmaceuticals execs, 20 states unveiled a civil lawsuit accusing half a dozen drugmakers, including Mylan, Teva and Heritage with essentially the same actions.

The lawsuit, which also includes Aurobindo Pharma, Citron and Mayne Pharma, said it is based on an investigation by Connecticut Attorney General’s office launched in 2014. The suit says investigators uncovered multiple examples of price fixing and collusion which they will eventually tackle but this suit focuses on two drugs, the delayed-release version of antibiotic doxycycline hyclate, and diabetes drug glyburide, which are also the two drugs that the Heritage execs are accused of exploiting.

The suit says, that instead of the traditional stair-stepping down in prices as more generics entered the market, “Prices for dozens of generic drugs have uncharacteristically risen—some have skyrocketed—for no apparent reason...” Not all of the lawsuit filings are public and so the prices the drugmakers are said to have charged are not provided.

Reuters points out that Minnesota Sen. Amy Klobuchar, who has been pushing for action, has said that the price of doxycycline, rose between October 2013 and May 2014 from $20 for 500 tablets to $1,849.

In comments to Reuters, Mylan denied the charge, Teva said the company had found no evidence that would “give rise to any civil or criminal liability,” while Heritage, part of India's Emcure Pharmaceuticals, referred to an earlier statement that put the blame for any price fixing on the former executives named in the federal charges.

Jeffrey Glazer, former Heritage CEO, and Jason Malek, the company’s former president, this week were charged in federal court with conspiring to “fix prices, rig bids and allocate customers.”

The states’ lawsuit said that the Connecticut  probe was set in motion by “outrage from public officials, payers and consumers” who saw generic drug prices soar to more than 1,000% in some cases. It claims that the alleged price fixing was discussed at trades shows and conferences then “refined and coordinated” at “dinners, girls nights out” and through phone calls, emails and text messages.

It details a specific agreement it says was worked out between Heritage and Mylan to divide up market share for Doxy DR to avoid a “price war” as Heritage brought its drug to market. It says, Mylan agreed to "walk away" from at least one large national wholesaler and one large pharmacy chain to allow Heritage to get market share while agreeing not to reduce prices. It says Mayne Pharma then approached Heritage with a similar plan.

The state’s probe started in 2014 and indications are that there is plenty more to come, from the feds and from the states. A whole raft of companies, including Teva, Mylan, Sun Pharma and its subsidiary Taro Pharmaceutical Industries, Mayne and Par Pharma have each disclosed subpoenas relating to the federal investigation in the last several years.

The lawsuit by the 20 states says that the investigation is ongoing and that price gouging involving other drugs “will be acted upon at the appropriate time.”

Jason Gerberry, a Leerink Partners analyst, told investors in a note Wednesday after the charges involving the former Heritage execs that he expects the DOJ will roll out additional cases over the next couple of years.