Lawsuit: Minnesota sales rep 'significant player' in generic drug price fixing

- Minnesota’s attorney general is moving to file a lawsuit against a dozen pharmaceutical companies for allegedly scheming to illegally drive up the prices of widely-used generic drugs. The drugs named in the lawsuit are prescribed for common ailments like arthritis, asthma, diabetes, high blood pressure, infections, glaucoma, anxiety and seizures.

According to the lawsuit, a Minnesota-based pharmaceutical sales rep was a “significant player” in the price-fixing scheme. She allegedly organized dinners and meetings with employees of competitors when they visited Minnesota, using these meetings to exchange business plans and make agreements on price fixing or market allocation.

200 PERCENT INCREASES: The price of a glaucoma and seizure drug named in the lawsuit increased in price from 58 cents per tablet in 2013 to $2.17 per tablet in 2014 -- a 275 percent jump. The price of an arthritis medication increased from $32 in 2012 to $108 in 2016 – a 230 percent hike.  And a drug used to treat anxiety increased from $1.10 per tablet in 2013 to $3.87 per tablet in 2014 -- a 253 percent increase.

THE COMPANIES: This legal action is an extension of an antitrust lawsuit Minnesota Attorney General Lori Swanson filed in 2016 against six pharmaceutical companies: Heritage Pharmaceuticals, Inc., Mayne Pharma, Inc., Citron Pharma, LLC, Aurobindo Pharma USA, Inc., Teva Pharmaceuticals USA, Inc., and Mylan Pharmaceuticals, Inc., for colluding to drive up the prices of antibiotic and diabetes medicines. 47 AGs are participating in the litigation. 

The extension of the lawsuit alleges that each of the 12 companies colluded with one or more of the other defendants named in the suit to inflate the prices of their medications. The new defendants are: 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 Companay, Inc., Par Pharmaceutical Companies, Inc., Sandoz, Inc., Sun Pharmaceutical Industries, Inc., and Zydus Pharmaceuticals.

“At a time when many patients can’t afford their prescriptions, these companies colluded to jack up the prices even higher,” said a statement from Attorney General Lori Swanson.

THE FIX: According to the lawsuit, the companies allegedly colluded to develop a variety of price-fixing schemes carried out through text messages, emails, phone calls and meetings. In some cases, the companies agreed to increase the prices of a generic drug. In other cases, the companies agreed to divide the market for specific generic drugs by pulling out of the bidding for certain accounts or by submitting bids that had no chance of being accepted.

In many industries, the middleman distributors help prevent collusion by demanding that manufacturers compete against each other for the best price. But in the pharmaceutical industry, manufacturers offer rebates and other incentives to distributors, meaning the middlemen make even more money if manufacturers increase their prices. The higher costs are ultimately passes along to patients.

GENERIC DRUGS COSTS SURGING: Generic drugs are supposed to be cheaper than brand name drugs, but the attorney general says the cost of the 50 most popular generic drugs increased more than 370 percent from 2010 to 2014.

The lawsuit seeks injunctive relief, damages, civil penalties and disgorgement of any company profits tied to illegal price fixing.

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