Generic Drug Companies Accused of Price Gouging

William Tong in East Hartford Connecticut

William Tong in East Hartford Connecticut

US states filed a lawsuit accusing Teva Pharmaceuticals USA Inc of orchestrating a sweeping scheme with 19 other drug companies to inflate drug prices - sometimes by more than 1,000% - and stifle competition for generic drugs, state prosecutors said on Saturday. "We have hard evidence that shows the generic drug industry perpetrated a multi-billion dollar fraud on the American people", Tong said.

Connecticut's new attorney general, William Tong, is dramatically expanding the scope and raising the profile of the state's long-running investigation of drug price-fixing, accusing the generic drug industry of a massive anti-trust conspiracy that has cost American consumers, taxpayers and insurers billions of dollars.

"During a 19-month period beginning in July 2013 and continuing through January 2015, Teva significantly raised prices on approximately 112 different generic drugs".

The 20 drug companies engaged in illegal conspiracies to divide up the market for drugs to avoid competing and, in some cases, conspired to either prevent prices from dropping or to raise them, according to the complaint by 44 U.S. states, filed on Friday in the U.S. District Court in CT.

The suit is 510 pages and is against 20 drug companies, including Teva Pharmaceuticals, alleging that the producers conspired to raise prices.

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The suit says that in 2012, companies made a decision to "take this understanding to the next level", embarking on "one of the most egregious and damaging price-fixing conspiracies in the history of the United States". It's the result of an investigation that CT started in 2014, which was later expanded to include 48 other states and territories.

As a result of the drug companies' conspiracies, it said, consumers and states paid "substantially inflated and anticompetitive prices for numerous generic pharmaceutical drugs" while the drug companies profited.

To accomplish this goal, the suit says Teva selected a core group of competitors with which it already had "very profitable collusive relationships", and developed understandings to lead and follow each other's price increases.

"When communications were reduced to writing or text messages, defendants often took overt and calculated steps to destroy evidence of those communications", according to the suit.

"Teva continues to review the issue internally and has not engaged in any conduct that would lead to civil or criminal liability".

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'The company delivers high-quality medicines to patients around the world and is committed to complying with all applicable laws and regulations in doing so'.

The lingering financial troubles, dating back to Teva's loss of it copyrights on several generic drugs, present enormous challenges for Teva CEO Kåre Schultz, a Danish business executive who was appointed in 2017 based on his rare ability to carry out unsentimental purges of failing companies.

"Teva is a consistent participant in the conspiracies identified in this complaint, but the conduct is pervasive and industry-wide", according to the complaint that was filed in federal court in CT. The first, filed in 2016, named 18 corporate defendants and two individual defendants.

The industry generally has denied any wrongdoing, although two former executives from Heritage Pharmaceuticals, one of the original defendants, have reached settlements with the coalition of states and are cooperating.

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