BioPharma, Legal

Generic drugmakers thwarted competition on topical drugs, suit alleges

The suit, filed Wednesday in federal court by more than four dozen attorneys general, accuses 26 generic drug companies and 10 executives of keeping prices artificially high for the drugs. It is the third in a series of antitrust lawsuits targeting the industry.

Attorneys general in most of the states, the District of Columbia and several territories have filed a lawsuit in federal court against more than two dozen generic drug manufacturers, alleging that they conspired to artificially inflate and manipulate the prices of topical drugs while squelching competition.

The 606-page complaint was filed Wednesday in the U.S. District Court for the District of Connecticut and is the third in a series of lawsuits filed in connection with antitrust investigations into generic drug companies. Previous suits were filed in December 2016 and last May, respectively accusing 18 and 20 generic drug companies of inflating the prices of 15 and 100 generic drugs. The latest suit names 26 manufacturers of generic dermatological drugs and 10 individual executives. In the latest suit, the plaintiffs are seeking injunctive relief and also monetary damages.

“Generic drugs are meant to provide consumers with reliable, cost-effective alternatives to name-brand medication, but because of a widespread conspiracy between these companies, consumers were left paying the bill while pharmaceutical executives lined their pockets with billions,” said New York Attorney General Letitia James, who is among the 51 attorneys general participating, in a statement. “These companies put profits over public health, which could have resulted in millions across the country being left without the vital medication they needed.”

The suit notes that between 2007-2014, most of the U.S. market for generic topical drugs – about two-thirds – was controlled by three companies. It goes on to allege that in order to command a larger share of the market, the companies communicated with each other to raise prices and minimize competition, along with several other generic manufacturers.

The suit further notes that demonstrating generic topical drugs are equivalent to their branded counterparts requires overcoming high technical barriers, which is expensive and time-consuming, thereby limiting the number of players on the market. “As a result, the sales and pricing executives at these companies know each other well and have used those business and personal relationships as a means to collude to limit competition, allocate customers, and significantly raise prices on dozens of generic topical products,” the complaint read.

The time period referred to in the lawsuit coincides with huge increases in the prices of generic drugs, with some rising as much as 1,000%. While generic drug companies attributed the increases to factors like industry consolidation and plant closures, the attorneys general allege this was “far from the truth.” Rather, they say it was because of collusion among the companies, which would agree not to compete with each other and to follow each other in raising prices.

In an emailed statement, generic drug industry lobbying and trade organization the Association for Accessible Medicines said it supports competition and policies that promote it.

“AAM is fully committed to compliance with all laws and to maintaining high ethical standards in the way we do business,” the statement read. “Illegal behavior, such as price-fixing or other violations of antitrust law, is inconsistent with AAM’s rules and procedures. We seek to maintain the highest ethical standards as we work to bring medicine to patients in the U.S.”

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