Ohio Suing Generic Drug Companies that Colluded to Keep Prices High, Lawsuit Says

OHIO - Several generic drug manufacturers colluded to inflate prices and reduce competition, according to a lawsuit filed by the state of Ohio and 19 other states today. In some cases, the prices of these generic drugs has jumped by as much as 1,000 percent over the last several years. Heritage Pharmaceuticals is named as the ringleader of the conspiracy by the lawsuit.

Generic drugs account for nearly eight out of every 10 prescription medications used by Americans, according to the FDA, and are supposed to be, on average, 80 to 85 percent cheaper than brand name equivalents.

Along with Heritage, Aurobindo Pharma USA, Citron Pharma, Mayne Pharma (USA), Mylan Pharmaceuticals, and Teva Pharmaceuticals USA were named as defendants in the lawsuit. The companies allegedly got together to discuss setting prices and divvying up markets. Specifically, the suit focuses on the drugs DR and Glyburide.

“The cost of some generic drugs has increased dramatically, and some consumers have seen their costs go up by double, triple, or even more,” Ohio Attorney General Mike DeWine said in a statement. “People shouldn’t have to face unfair prices for the medication they need. They deserve the benefits of fair market competition.”

The suit alleges that the companies would avoid competing with one another in certain markets, preventing a decline in prices for generics. To do this, the companies would discuss how much market share and which customers each company was entitled to. There were also times when representatives from the companies would simply text or call one another and agree to hike prices on a particular drug. The suit claims that representatives then tried to destroy written messages about the scheme when an investigation into the matter began.

Two former executives for Heritage were recently indicted by the Justice Department for their part in price fixing schemes. Jeffrey Glazer, the former CEO of Heritage, and Jason Malek, the former president, are both accused of fixing prices, rigging bids for customers, and carving up and separating customers for antibiotic, doxycycline hyclate.

"In August 2016, following an internal investigation that revealed a variety of serious misconduct by the individuals charged today, Heritage Pharmaceuticals terminated them," a company spokesperson for Heritage said in an emailed statement. "We are fully cooperating with all aspects of the Department of Justice’s continuing investigation. Recently Heritage initiated its own legal action against these same individuals to seek redress for an elaborate embezzlement and self-dealing scheme. We are deeply disappointed by the misconduct and are committed to ensuring it does not happen again."

The suit also claims that these companies would negotiate anti-competitive agreements at trade shows, industry dinners, or even seemingly innocuous "girls nights out" events. Meanwhile, spokespeople for the companies were claiming the skyrocketing prices were due to more benign factors, like industry consolidation and FDA-mandated plant closures.

Besides Ohio, the other states suing the generic drug manufacturers are: Connecticut, Delaware, Florida, Hawaii, Idaho, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Nevada, New York, North Dakota, Pennsylvania, Virginia, and Washington.

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