Multiply Drug Companies Co-Conspirators in Price Gouging

Generic Drug Price-Fixing Complaint Unsealed

By Aujunai Charpentiair

BALTIMORE, MD (June 24, 2019) – Maryland Attorney General Brian E. Frosh today

released the full, unredacted complaint against Teva Pharmaceuticals and 19 of the nation’s
largest generic drug manufacturers after the court granted the states’ motion to unseal the
complaint.

Among the evidence now public are emails between generic drug manufacturers coordinating
their response to a Congressional inquiry, emails enforcing “fair share” and “playing nice in the
sandbox” market allocation, “fluff pricing” strategy and other brazen coordination to artificially
inflate prices, hinder competition and unreasonably restrain trade across the industry.
The lawsuit was first filed by Maryland and 43 other states in May in U.S. District Court for the
District of Connecticut.

“These emails show the brazen tactics used across the industry to inflate prices and allocate
market share for drugs that many Marylanders need,” said Attorney General Frosh. “In their
own words, industry officials sought to cover up the conspiracy that we have alleged in our
complaint while they simultaneously sought to mislead Congress.”

“Polite F-U Letters” In early October 2014, Heritage Pharmaceuticals received a letter from Congressman Elijah Cummings and Senator Bernie Sanders as part of their joint investigation into price increases in the generic drug industry. Now emails unsealed by the court show that Heritage outside counsel immediately coordinated a response with counsel for Teva and Mylan.

“No emails please”

communication in writing. Still, ample written evidence of their conspiracy has now been
released that show consciousness of guilt.

“I guess this is what they call co-opetition”
In one series of exchanges, senior executives at Mylan and Sandoz allegedly colluded to divvy
up market share for a blood pressure medication. Both companies were the first to launch generic
Valsartan on the same day, September 12, 2012. Leading up to the launch, records show
company representatives spoke at least 21 times by phone to divvy up the market so that each
competitor could obtain roughly 50 percent market share. The conspiracy apparently pleased
company executives, including a Sandoz executive who states, “sometimes a little help from our
competition is welcome as well.” Another senior executive replied: “I guess this is what they
call ‘co-opetition.’”

High Quality Competitors
As Director of National Accounts at Teva, Defendant Nisha Patel’s primary responsibility was to
implement price increases. The complaint alleges that she did this by systematically conspiring
with Teva’s competitors and maintained a ranking system of Teva’s competitors based on their
collusive relationships, with +3 assigned to the most collusive and -3 assigned to the least.
Detailed rankings and charts documenting her communication with competitors have been
unsealed.

Industry Code Words Revealed: Playing Nice in the Sandbox, Fair Share, Fluff Pricing
The unredacted complaint reveals commonly used code words used by co-conspirators as they
colluded with competitors to divvy up market share and coordinate on price increases in
violation of federal antitrust law. These include “fair share,” “playing nice in the sandbox,” and
“fluff pricing.”

The complaint is the second to be filed in the attorneys general ongoing, expanding investigation.
The first complaint, still pending in U.S. District Court in the Eastern District of Pennsylvania,
was filed in 2016 and now includes 18 corporate defendants, two individual defendants, and 15
generic drugs. Two former executives from Heritage Pharmaceuticals, Jeffery Glazer and Jason
Malek, have entered into settlement agreements and are cooperating with the Attorneys General
working group in that case.

In addition to Maryland, Alabama, Alaska, Arizona, Colorado, Connecticut, Delaware, Florida,
Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,
Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New
Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon,
Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Vermont, Virginia, Washington,
West Virginia, Wisconsin and Puerto Rico joined the suit.

First Complaint Against Drug Manufacturers 2017

Maryland Joins 44 Other States in Seeking Leave to File New, Expanded Antitrust Lawsuit against 16 Generic Drug Manufacturers States Allege Broad, Industry-Wide Price Fixing Scheme among Drug Manufacturers to Restrain Competition and Raise Prices on 15 Generic Drugs; Senior Executives Sued

BALTIMORE, MD (October 31, 2017) – Maryland Attorney General Brian E. Frosh, along
with 44 other state attorneys general taking part in a wide-ranging multistate antitrust
investigation of the generic drug industry, asked the federal court for permission to file a new
complaint in the states’ pending lawsuit that increases the number of generic drug manufacturer
defendants from six to 16 and the number of drugs at issue in the litigation from two to 15.
For the first time, the states are also suing senior executives at two generic drug companies who
are alleged to have engaged in the illegal conduct.

In the expanded complaint, the states allege a number of specific illegal agreements among the
defendants to fix prices and allocate customers for a number of generic drugs. The states further
allege that these conspiracies were part of a much broader, overarching industry code of conduct
that enabled the defendant manufacturers to divvy up the market for specific generic drugs in
accordance with an established, agreed-upon understanding for assigning each competitor a share of the market.

“Price fixing has driven up the cost of prescription drugs for millions of Americans,” said
Attorney General Frosh. “This behavior is illegal and endangers the health and welfare of
Maryland families.”

Previously, the lawsuit was filed against generic drug manufacturers Heritage Pharmaceuticals,
Inc.; Aurobindo Pharma USA, Inc.; Citron Pharma, LLC; Mayne Pharma (USA), Inc.; Mylan
Pharmaceuticals, Inc.; and Teva Pharmaceuticals USA, Inc., alleging that they entered into
illegal conspiracies in order to artificially inflate and manipulate prices and reduce competition
in the United States for two drugs: doxycycline hyclate delayed release, an antibiotic, and
glyburide, an oral diabetes medication.

The states are seeking to expand the complaint to include Actavis Holdco U.S., Inc.; Actavis
Pharma, Inc.; Ascend Laboratories, LLC; Apotex Corp.; Dr. Reddy's Laboratories, Inc.; Emcure
Pharmaceuticals, Ltd.; Glenmark Pharmaceuticals, Inc.; Lannett Company, Inc.; Par

Pharmaceutical Companies, Inc.; Sandoz, Inc.; Sun Pharmaceutical Industries, Inc.; and Zydus
Pharmacuticuals (USA), Inc.

The expanded complaint also names two individual defendants: Rajiv Malik, president and
executive director of Mylan N.V., the parent company of Mylan Pharmaceuticals, Inc.; and
Satish Mehta, the chief executive officer and managing director of Emcure Pharmaceuticals,
Ltd., the parent company of Heritage Pharmaceuticals, Inc. The expanded complaint also adds allegations that the companies entered into conspiracies involving the following additional generic drugs:

Acetazolamide, used to treat glaucoma and epilepsy;
 Doxycycline monohydrate, an antibiotic;
 Fosinopril-hydrochlorothiazide, used to treat high blood pressure;
 Glipizide-metformin, a diabetes medication;
 Glyburide-metformin, a diabetes medication;
 Leflunomide, used to treat rheumatoid arthritis;
 Meprobamate, an anxiety medication;
 Nimodipine, a calcium channel blocking agent used to reduce problems caused by a bleeding
blood vessel in the brain;
 Nystatin, an antifungal medication;
 Paromomycin, an antibiotic used to treat certain parasite infections;
 Theophylline, used to treat asthma and other lung problems;
 Verapamil, used to treat hypertension; and
 Zoledronic acid, used to treat hypercalcemia.

The states allege that the defendants routinely met with their competitors at industry trade shows, customer conferences and other events, as well as communicating through direct email, phone and text messages. The alleged illegal conduct – including efforts to fix and maintain prices, allocate customers and otherwise thwart competition – has increased prices for generic drugs purchased by consumers. The states allege that the conduct caused significant, harmful and
continuing effects in the country’s healthcare system.

The lawsuit is currently pending as part of the multidistrict litigation in the U.S. District Court
for the Eastern District of Pennsylvania. Portions of the expanded complaint are redacted in
order to avoid compromising ongoing investigations.
In 2015, generic drug sales in the United States were estimated at $74.5 billion; currently, the
generic pharmaceutical industry accounts for approximately 88 percent of all prescriptions
written in the United States.

Article reprint from Press Release, Office of Brian E. Frosh, ATTORNEY GENERAL for the state of Maryland

By Aujunai Charpentiair