Union lawsuits allege price collusion by Novartis, Taro, Wockhardt, others

Civil lawsuits have been filed by unions alleging that some generic drugmakers colluded on prices of a topical skin cream.

The industry is braced for charges from a Justice Department probe into possible collusion on generic drug prices, but ahead of that, some face civil litigation over pumped-up prices. Civil suits have been filed naming Novartis, Sun Pharma’s Taro, Wockhardt, Actavis, Perrigo and others for allegedly agreeing at an industry meeting to raise prices on generic skin creams.

The lawsuits have been filed by unions which claimed that because of the collusion, they overpaid for the drug or drugs, Bloomberg reported. They pointed to data that the drugmakers took price hikes on certain meds by nearly the same amounts within months of one another. 

A lawsuit filed by the Sergeants Benevolent Association Health & Welfare Fund alleged that Sandoz, Akorn’s Hi-Tech, Perrigo, Taro and Wockhardt made a deal on prices at the 2014 annual meeting of the Generic Pharmaceutical Association. It cited data that showed the companies' prices started rising within a couple of months of the meeting. It cited data showing that about a year after the meeting, Sandoz, Hi-Tech, Perrigo and Taro had all raised their prices for clobetasol by 894.35 percent.

"So that’s sort of an odd number, right?" Peter Safirstein, a lawyer for the union told Bloomberg. "Is it a coincidence that every single manufacturer happens to be at 894.35 percent for a topical gel as a price increase?"

Perrigo, Taro and Teva, which this year acquired Actavis, declined to comment to Bloomberg, while Wockhardt and Hi-Tech owner Akorn didn't respond to requests for comment. Novartis’ Sandoz unit in a statement declined to comment on the litigation, Bloomberg said, but pointed out that net prices of its health-care products in the U.S. went down 7 percent in 2015. It is among the many companies to disclose receiving DOJ subpoenas into generic drug pricing, but said it has never been notified that it is a target of the investigation.

The news service said the Generic Pharmaceutical Association also didn’t respond. There have been reports by sources that DOJ prosecutors have looked at drug associations as part of their investigation.  

Reports of the probe have led others to look hard at generic drug prices. Citing Medicare data, the Los Angeles Times recently reported that 8 of the 10 drugs that had the biggest percentage price hikes in 2014 were generic medicines made by multiple manufacturers. It showed that after generic drugmaker Lannett Co. bumped its price for its generic version of gallstone drug ursodiol by 1,000 percent, competitors also took big hikes, pricing their versions the same or close.

The DOJ probe into potential price collusion by generic drug makers has been going on for more than two years as indicated by SEC filings by companies that have been subpoenaed. But Bloomberg recently reported that prosecutors are close to filing charges and some action may occur by year-end. According to the news service, the investigation has looked at the prices of two dozen drugs and “about a dozen companies,” and that charges may be filed against companies that include Mylan, Teva, Lannett, Impax and Endo International.