U.S. states allege broad generic drug
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[November 01, 2017]
By Karen Freifeld
WASHINGTON (Reuters) - A large group of
U.S. states accused key players in the generic drug industry of a broad
price-fixing conspiracy, moving on Tuesday to widen an earlier lawsuit
to add many more drugmakers and medicines in an action that sent some
company shares tumbling.
The lawsuit, brought by the attorneys general of 45 states and the
District of Columbia, accused 18 companies and subsidiaries and named 15
medicines. It also targeted two individual executives: Rajiv Malik,
president and executive director of Mylan NV, and Satish Mehta, CEO and
managing director of India's Emcure Pharmaceuticals.
Shares of Pennsylvania-based Mylan, also named as a defendant, closed
down 6.6 percent.
The states said the drugmakers and executives divided customers for
their drugs among themselves, agreeing that each company would have a
certain percentage of the market. The companies sometimes agreed on
price increases in advance, the states added.
The states said Malik and Mehta spoke directly to one another to agree
on their companies' shares of the market for a delayed-release version
of a common antibiotic, doxycycline hyclate.
"It is our belief that price-fixing is systematic, it is pervasive, and
that a culture of collusion exists in the industry," Connecticut
Attorney General George Jepsen, who is leading the case, told a news
conference in Hartford.
Mylan said in a statement it had found no evidence of price-fixing by
the company or any of its employees, and vowed to defend itself
vigorously. Malik, the company's second-ranking official, has received
more than $50 million in compensation over the past three years, last
year making more than CEO Heather Bresch.
"Mylan has deep faith in the integrity of its president, Rajiv Malik,
and stands behind him fully," the company said.
Emcure, also a defendant in the case, did not immediately respond to a
request for comment.
Two former executives of Emcure's subsidiary Heritage Pharmaceuticals
pleaded guilty in January to federal charges of conspiring to fix prices
and divide up the market for doxycycline and the diabetes drug
The two men, former Heritage president Jason Malek and former chairman
and chief executive Jeffrey Glazer, reached a deal with 41 states and
territories in which they each agreed to pay $25,000 and cooperate with
the state probe.
Soaring drug prices from both branded and generic drug manufacturers
have sparked outrage and investigations in the United States. President
Donald Trump this year accused pharmaceutical companies of "getting away
with murder" with their drug pricing.
Executives like Mylan's Bresch and former Turing Pharmaceuticals CEO
Martin Shkreli have been called in front of Congress to defend the cost
of their products.
MORE COMPANIES TARGETED
The original complaint, filed in December, targeted Mylan, Heritage,
Aurobindo Pharma USA Inc, Citron Pharma LLC, Mayne Pharma USA Inc and
Teva Pharmaceuticals USA Inc.
[to top of second column]
Mylan NL CEO Heather Bresch is sworn in before a House Oversight and
Government Reform Committee hearing on the Rising Price of EpiPens,
at the Capitol in Washington, U.S. September 21, 2016. REUTERS/Yuri
The states are pressing a new complaint that would add Novartis AG's
unit Sandoz, India-based Sun Pharmaceutical Industries Ltd, Endo
International PLC's unit Par Pharmaceutical, Dr. Reddy's
Laboratories, Apotex Corp, Glenmark Generics Ltd, Lannett Company
Inc, Alkem Laboratories Ltd's unit Ascend Laboratories and Cadila
Healthcare Ltd's unit Zydus Pharmaceuticals Inc.
Jepsen said the investigation is continuing, and that claims would
likely be brought against more companies, and possibly executives,
in the future.
The news hurt shares of companies named in the expanded suit that
are traded in the United States. In addition to Mylan's drop,
Lannett lost 13.7 percent. Shares of Endo were up 7 percent, but
down from their 12 percent peak before the news of the amended
Teva spokeswoman Denise Bradley said the company denied the
allegations. Endo spokeswoman Heather Lubeski said the company would
vigorously defend itself against the claims. Other companies did not
immediately respond to requests for comment.
The expansion of the suit requires the court's permission.
The original lawsuit centered on just two medicines, delayed-release
doxycycline and glyburide.
The price of doxycycline rose from $20 for 500 tablets to $1,849
between October 2013 and May 2014, according to U.S. Senator Amy
Klobuchar, a Minnesota Democrat who had been pressing for action on
high drug prices.
The amended complaint would expand the number of drugs to include
glipizide-metformin and glyburide-metformin, which are among the
most commonly used diabetes treatments.
Others include: acetazolamide, which is used to treat glaucoma and
epilepsy; the antibiotic doxycycline monohydrate; the blood pressure
medicine fosinopril; the anti-anxiety medicine meprobamate; and the
calcium channel blocking agent nimodipine.
The U.S. Justice Department is conducting a parallel criminal
investigation. On Friday, the department asked the Pennsylvania
court presiding over the lawsuit to put the lawsuit's discovery
process on hold, saying it could interfere with the criminal probe.
Connecticut Assistant Attorney General Joseph Nielsen said on
Tuesday the states would likely oppose that request, which could
slow the lawsuit.
(Reporting by Karen Freifeld in Washington; Additional reporting by
Brendan Pierson and Michael Erman in New York; Writing by Diane
Bartz; Editing by Chris Sanders and Will Dunham)
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