2016 News Releases

AG Derek Schmidt sues generic drug companies, alleges price-fixing conspiracy violates antitrust laws

Release Date: Dec 19, 2016

20 states join together to challenge anticompetitive conduct that drives up drug prices

TOPEKA – (December 19, 2016) – Kansas Attorney General Derek Schmidt last week filed a federal lawsuit accusing six generic drug-making companies of illegally conspiring to drive up prices of two generic drugs.

The lawsuit, filed in federal district court in Connecticut, accuses Heritage Pharmaceuticals, Inc., Auribindo Pharma USA, Inc., Citron Pharma, LLC, Mayne Pharma (USA), Inc., Mylan Pharmaceuticals, Inc. and Teva Pharmaceuticals USA, Inc. of entering into numerous illegal conspiracies to unreasonably restrain trade, artificially inflate and manipulate prices and reduce competition for two drugs. The drugs are doxycycline hyclate delayed release, an antibiotic, and glyburide, an oral diabetes medication.

“The ongoing investigation already has produced strong evidence that these companies engaged in extensive misconduct to drive up the price of generic drugs at the expense of consumers and taxpayers,” Schmidt said. “We’re working together with other states to hold the defendants accountable.”

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.

Kansas has joined with 19 other states to investigate the reasons behind suspicious price increases of certain generic pharmaceuticals. The investigation, which is still ongoing as to a number of additional generic drugs, uncovered evidence of a broad, well-coordinated and long-running series of conspiracies to fix prices and allocate markets for a number of generic pharmaceuticals in the United States. In their lawsuit, the states allege that the misconduct was conceived and carried out by senior drug company executives and their subordinate marketing and sales executives. 

The complaint further alleges that the defendants routinely coordinated their schemes through direct interaction with their competitors at industry trade shows, customer conferences and other events, as well as through direct email, phone and text message communications. The anticompetitive conduct – including efforts to fix and maintain prices, allocate markets and otherwise thwart competition – violated antitrust law and caused significant, harmful and continuing effects in the country’s healthcare system, the states allege.

The states allege that the drug companies knew their conduct was illegal and made efforts to avoid communicating with each other in writing or, in some instances, to delete written communications after becoming aware of the investigation. The states allege that the companies’ conduct violated the federal Sherman Act and are asking the court to enjoin the companies from engaging in illegal, anticompetitive behavior and for equitable relief, including damages, to address the violations of law and restore competition.

In addition to Kansas, the plaintiff states in this lawsuit are Connecticut, Delaware, Florida, Hawaii, Idaho, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Nevada, New York, Ohio, Pennsylvania, North Dakota, Virginia and Washington.

The complaint was filed under seal, and portions are redacted to avoid compromising the states’ ongoing investigation. A copy of the publicly available complaint is available at http://bit.ly/2hM6C3H.

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