Florida becomes 44th state to join federal lawsuit alleging ‘industry-wide collusion’ in generic drug pricing

By John Haughey
watchdog.org
May 13, 2019

Florida Attorney General Ashley Moody

Attorney General Ashley Moody announced Monday that Florida has joined 43 other states and Puerto Rico in a federal lawsuit filed against generic drug companies for allegedly colluding to raise drug prices by up to 1,000 percent.

“Inflating and manipulating the pricing of essential drugs prescribed to those with chronic conditions is shameful,” Moody said in a statement. “Routine health care can already be a burdensome cost for individuals, not to mention those suffering with life-altering and critical illnesses, and patients should not have to further worry about rising prescription drug costs of medicine they may desperately need.”

The 500-page anti-trust lawsuit, spurred by a five-year Connecticut Attorney General investigation, accuses 15 individuals and Teva Pharmaceuticals USA, Inc., of conspiring with 19 other companies to inflate prices by 400 to 1,000 percent on hundreds of generic prescription drugs.

Connecticut filed the lawsuit Friday, citing an “industry-wide, systematic conspiracy to bilk consumers out of billions of dollars” and demanding they pay potentially billions of dollars in compensation from “ill-gotten gains” in damages and penalties.

The lawsuit is the second filed by states against pharmaceutical manufacturers. A 2016 lawsuit – Florida is also a party – cited 18 corporate defendants in price-fixing schemes. That lawsuit remains in litigation, although two former company executives have entered settlements and are cooperating with investigators.

Connecticut’s lawsuit, featured on Sunday’s CBS “60 Minutes,” alleges generic drug-makers operated under an agreement not to compete with each other and to allocate “fair shares” of the market between themselves to avoid price competition.

The lawsuit documents conversations between company officials to coordinate pricing, which the suit claims illegally undermines the 1984 federal law that allowed manufacturers to make more affordable generic versions of pharmaceuticals once brand name patents expired.

In studying patterns during its five-year probe, Connecticut investigators said prices jumped by 400 percent in one year for as many as 1,215 generic drugs after manufacturers communicated with each other to raise or maintain prices.

“For many years, the generic pharmaceutical industry has operated pursuant to an understanding among generic manufacturers not to compete with each other and to instead settle for what these competitors refer to as ‘fair share,’” the lawsuit maintains. “This understanding has permeated every segment of the industry, and the purpose of the agreement was to avoid competition among generic manufacturers that would normally result in significant price erosion and great savings to the ultimate consumer.”

In joining the lawsuit, Florida maintains Teva Pharmaceuticals USA and 19 other drug-makers violated the state’s anti-trust law and the Florida Deceptive and Unfair Trade Practices Act. It seeks undetermined compensation for “purchases of pharmaceuticals by the state of Florida and its government entities and municipalities, Florida businesses, and individual consumers.”

“The state of Florida and its government entities and municipalities, and Florida individual consumers, have been injured and will continue to be injured by paying more for pharmaceuticals purchased directly and/or indirectly from the defendants and their co-conspirators than they would have paid in the absence of the conspiracy,” Florida’s lawsuit said.

The generic pharmaceutical industry vehemently denies the allegations, with officials from Teva USA, a unit of Israeli company Teva Pharmaceutical Industries, vowing to fight the lawsuit.

In a Sunday night statement after the ’60 Minutes’ report, the Association for Accessible Medicines, an industry group, denied the allegations, claiming manufacturers are “committed to supporting policies that promote competition and help speed the availability of generic and ‘bio-similar’ medicines to patients.”

“Today’s generic drug industry is characterized by intense competition,” the statement continued. “As a result, pricing data from the last three years indicate that generic prices have declined overall and saved patients and taxpayers literally billions of dollars compared to brand-name drug prices.”

During the recently-concluded legislative session, lawmakers adopted House Bill 1253 to allow state investigators access to Florida’s Prescription Drug Monitoring Program [PDMP] — which tracks more than 230 million prescription records — to prove its claim manufacturers and retailers recklessly oversold opioids.