A lawsuit has been filed by 20 state attorneys in the US, accusing six pharmaceutical firms from America, India and Australia for alleged conspiracy to raise the price of the antibiotic doxycycline and diabetes drug glyburide.
The generic drug makers include Heritage Pharmaceuticals Inc, Aurobindo Pharma USA, Citron Pharma, Mayne Pharma (USA), Mylan Pharmaceuticals and Teva Pharmaceuticals USA. Shares of Aurobindo Pharma fell by nearly 4% to R691 on BSE following the report.
The lawsuit alleged that these companies entered into illegal conspiracies in order to unreasonably restrain trade, artificially inflate and manipulate prices and reduce competition in the US for two drugs: doxycycline hyclate delayed release, an antibiotic, and glyburide, an oral diabetes medication. The lawsuit was filed under seal in the US District Court for the District of Connecticut, George Jepsen, Connecticut Attorney General, said in a written release. Incidentally, Sun Pharmaceutical Industries and Dr Reddy’s Laboratories recently disclosed having received subpoenas under a US Department of Justice investigation into drug price rises by generic drugmakers.
“We are yet to receive any communication from the Court to understand the notice,” Aurobindo said when asked who filed the lawsuit and why. Aurobindo Pharma said that it will cooperate with all the authorities in this regard. Heritage, part of India’s Emcure Pharmaceuticals, has been accused of being the principal architect of the case.
“The company became aware of complaint from numerous states filed in Connecticut. It has received subpoena in March 2016 requesting non-product specific information and has not received any further requests for information or subpoenas after March 2016 subpoena,” Aurobindo Pharma said in a filing to BSE. The sales of Glyburide by its US subsidiary is not material as it is around $1.1 million in FY2016 as per IMS data, it added. However, Teva, Mylan and Heritage denied the charges.
In 2015, generic drug sales in the US were estimated at $74.5 billion; currently, the generic pharmaceutical industry accounts for approximately 88% of all prescriptions written in the US. In July 2014, the state of Connecticut initiated probe into 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 well-coordinated and long-running conspiracy to fix prices and allocate markets for doxycycline hyclate delayed release and glyburide. In today’s 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 anti competitive conduct – including efforts to fix and maintain prices, allocate markets and otherwise thwart competition – caused significant, harmful and continuing effects in the country’s healthcare system.