Over 40 states are suing generic drug companies for alleged conspiracy to hike prices

Investigators argue this is "one of the most egregious and damaging price-fixing conspiracies in the history of the United States."

More than 40 states are suing generic drug manufacturers over alleged price-fixing scheme. (Credit: George Frey/Getty Images)
More than 40 states are suing generic drug manufacturers over alleged price-fixing scheme. (Credit: George Frey/Getty Images)

More than 40 state attorneys general have filed a lawsuit against generic drug manufacturers over allegations that companies conspired for years to fix drug prices.

According to the lawsuit filed in Connecticut on Friday by 43 states and Puerto Rico, evidence shows these drug manufacturers embarked upon “one of the most egregious and damaging price-fixing conspiracies in the history of the United States.”

Investigators allege that the companies worked together to artificially inflate and manipulate prices for over 100 different types of generic drugs — including diabetes, cancer, and arthritis treatments.

The lawsuit implicates 20 firms and names 15 individual senior executives that oversee sales, marketing, and pricing. According to investigators, the drugs named in the suit account for billions of dollars of sales in the United States — a country which already has some of the highest drug prices in the world, especially compared to those where the government regulates or negotiates prices of new drugs.


“We have hard evidence that shows the generic drug industry perpetrated a multibillion dollar fraud on the American people,” said Democratic Connecticut Attorney General William Tong.

Tong said investigators have collected emails, text messages, phone records, as well as information from “former company insiders.” This evidence, he said, “will prove a multi-year conspiracy to fix prices and divide market share for huge numbers of generic drugs.”

The lawsuit alleges that the generic drug companies agreed to not compete with each other, instead settling for what they called a “fair share” of the market in order to avoid prices being lowered due to competition.

Then in 2012, according to the lawsuit, companies decided to “take this understanding to the next level.” Beyond simply maintaining their “fair share” of the market, the suit states manufacturers started to “significantly raise prices on as many drugs as possible.”


To do this, the suit describes how one of the companies named, Teva Pharmaceuticals USA Inc. — a wholly owned subsidiary of Israeli-based Teva Pharmaceuticals Industries Ltd. — selected a group of competing companies with which it had “very profitable collusive relationships” to develop a drug pricing strategy. Beginning in July 2013, the suit alleges Teva significantly raised prices for roughly 112 different drugs, 86 of which it worked on with its “high quality” competitors.

Among the demands of the civil suit is that the companies’ profits that resulted from these actions be paid to the state agencies and consumers harmed as a result.

A Teva spokesperson denied the allegations. And in a statement Saturday, Kelley Dougherty, a Teva vice president, said, “The allegations in this new complaint, and in the litigation more generally, are just that — allegations.”

“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,” Dougherty added.

Friday’s lawsuit is the second one to be filed in this investigation; the first, filed in 2016, named 18 corporate defendants and two individual defendants.

It comes at a time when drug pricing is getting heightened attention from politicians. In December, Sen. Elizabeth Warren (D-MA) — now a 2020 candidate — introduced a drug pricing bill that seeks to lower prices by allowing the government to manufacture certain drugs that lack competition.


Meanwhile, as the 2020 Democratic primary race ramps up, a few candidates have made drug prices a campaign issue. Candidates Sens. Amy Klobuchar (D-MN), Bernie Sanders (I-VT), and Cory Booker (D-NJ) have all spoken about the issue, including highlighting insulin prices as well as the idea of passing legislation that would allow health care providers to import drugs from other countries.

While the issue is gaining traction with lawmakers, it’s likely to remain an uphill battle. During the first two days of January, some 60 companies hiked their drug prices; some of the largest increases hovered around 10%, more than four times inflation.

Prices are so high for some drugs, that earlier this month a four-car “caravan” was organized from Minneapolis, Minnesota, to drive 600 miles north across the Canadian border to Fort Francis, Ontario, to purchase life-saving insulin.