UnitedHealthcare, fueled by federal probes, sues generics makers for price fixing

  • April 23, 2019

In a 355-page lawsuit, UnitedHealthcare sued the companies for collusion, naming a group of “core conspirators” that includes Teva and Mylan, as well as dozens of other drugmakers.  UnitedHealthcare, the largest insurer in the U.S., aims to claw back financial losses it says it suffered because of the inflated prices.

Filed in Minnesota federal court, UnitedHealthcare’s suit leans on government evidence and press reports detailing an industry-wide effort by generic drug makers to artificially jack up prices.  The insurer claims the core conspirators directed other generics companies to price their drugs in accordance with their scheme.

The evidence backing its claims is “well established at this point,” the new lawsuit says, pointing to guilty pleas from former execs at small generic drug maker Heritage Pharmaceuticals, plus a lawsuit from dozens of state attorneys general and an ongoing federal probe.  “Unprecedented price increases” for drugs named in the suit came with the “absence of any reasonable economic or market explanation for these price increases other than collusion,” the suit says.  To decide on pricing, the generic drug execs talked by telephone, e-mail and text, and met in person at trade association meetings, the suit claims.

As industry watchers know, UnitedHealthcare’s lawsuit is far from the first of its ilk.  Rival insurer Humana, for instance, already sued generic drug makers making the same allegations.

And meanwhile, federal investigators have issued subpoenas to Mylan, Teva, Actavis, Sandoz, Endo, Par Pharmaceuticals, Sun Pharmaceuticals, Impax, Lannett, Mayne, Dr. Reddy’s, Sandoz, Aurobindo and Taro, according to company disclosures.  The Department of Justice (DOJ) executed search warrants at offices for Perrigo, Mylan and Aceto, according to the lawsuit.  All in all, UnitedHealthcare argues the conspiracy was “effective and is still ongoing.”  It is seeking damages, an injunction and more.

Government officials have been investigating generic pricing collusion since 2014.  In December 2018, Connecticut Assistant Attorney General Joseph Nielsen told the Washington Post the probe had expanded to 300 drugs.  As the new lawsuit notes, the investigation so far has yielded guilty pleas from two former executives of Heritage Pharmaceuticals who are now cooperating with Investigators.

Connecticut Attorney General Jepsen and dozens of other attorneys general have also sued generics makers for alleged collusion.  The states say the companies referred to the generic drug market as a “sandbox” where they were supposed to “play nice” with one another.  Meanwhile, the DOJ has its own investigation underway, and criminal charges could come from that effort.

REFERENCE:  Fierce Pharma; 22 JAN 2019; Eric Sagonowsky

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