Israeli company Teva significantly raised the price of 112 generic drugs and coordinated with more than a dozen companies, the cost of at least 86 medications with its competitors. In some cases, prices increased by more than 1,000%.
Leading generic manufacturers, including Mylan and Pfizer, yesterday sued by more than 40 US states after a five-year investigation, led by Connecticut Attorney General William Tung.
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“We have solid evidence that generic drug companies have plotted billions of dollars in fraud against the American people,” Tong said in a statement. “We all wonder why our health insurance, especially prescription drugs, is so expensive in this country – and that’s the main reason.”
The lawsuit accuses manufacturers of inflating prices of more than 100 types of drugs, marking a significant expansion about the complaint filed in 2016.
In addition to the plaintiffs’ countries, the Anti-Trust Division of the Ministry of Justice also opened a criminal investigation. The head of the division said last week that charges would file, but did not say when.
The plaintiffs said the companies conspired to coordinate prices to raise prices and avoid competition. Senior officials, who used meals, parties and golf games to coordinate, also made direct phone calls, according to the prosecution. It mentions the names of specific divisions in the pharmaceutical companies, such as Teva’s Actavis, and Sandoz of Novartis.
The senior executives whose names mentioned in the lawsuit are Maureen Cavanaugh, a former senior vice president of Teva who now works for Lant; James Nesta, Sales Vice President, Mylan; And David Rekenthaler, former Teva vice president of sales for Apotex. Mylan president, Rajiv Malik, is mentioned in another lawsuit filed in 2017. This claim is still underway.
Representatives of the companies did not respond to requests for comment, as did the senior officials mentioned in the lawsuit.
Teva is at the center of the conspiracy, after 19 months from 2013 to 2015, significantly increased the prices of 112 generic drugs and coordinated the cost of at least 86 medications with its competitors. In some cases, prices raised by more than 1,000%.
“Teva has consistently taken part in the conspiracies described in the lawsuit, and its conduct is extensive and spread across the industry.”
“Through its most senior managers and accountants, Teva used a range of restrictive measures in a wide range, together with more than a dozen companies, all of which participated (knowingly) in price coordination.”
What is a “sandbox”?
About six months ago Teva was one of 16 generic drug manufacturers suspected of creating a cartel to determine prices. “This is probably the biggest cartel in US history,” said Joseph Nielsen, assistant attorney general in Connecticut. In the documents submitted to the court, Teva argued that allegations of conspiring to set prices “are completely speculative and based on no facts.”
The investigation revealed that senior company executives had created a code language to describe their conduct. For example, the “sandbox” referred to the market for generic prescription drugs. A “fair share” talked about the distribution of the sales pie so that each company enjoyed continuous profits, while “dirty the market” meant that one company ignored the unwritten rules and sold the drugs at a lower price than agreed. The officials were so friendly that they set up an alphabetical round to decide who paid the bill for the meals.
Teva also has exposure to lawsuits in the US against opioids makers which are addictive painkillers based on natural and synthetic materials.