Minnesota, 19 other states, sue over generic drug pricing

Lori Swanson
Minnesota Attorney General Lori Swanson.
Jim Mone | AP 2014

Minnesota joined 19 other states filing a federal antitrust lawsuit Thursday against six major prescription drug makers. The states accuse the companies of colluding to fix the prices of a widely-used generic antibiotic and an oral diabetes medicine.

The lawsuit asks the court to bar the companies from continuing the price-fixing scheme and seeks to reclaim any profits from the companies' actions.

The legal action was led by Connecticut Attorney General George Jepsen, whose office began its investigation more than two years ago into suspicious price increases of certain generic medications. Jepsen said his staff "developed compelling evidence of collusion and anticompetitive conduct" among many companies that manufacture and market generic drugs.

He called Heritage Pharmaceuticals "the principal architect of the conspiracies," but said he had evidence of "widespread participation in illegal conspiracies across the generic drug industry."

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According to the complaint, the defendants allegedly coordinated with their competitors at industry trade shows, customer conferences and other events, as well as through direct email, phone and text message communications. The 20 states also allege the drug companies knew their conduct was illegal and avoided communicating with one another in writing.

Minnesota Attorney General Lori Swanson said Minnesota was the home base of a significant player in the scheme.

The employee, who worked for Heritage Pharmaceuticals, organized several dinner meetings that led to pricing and market share agreements, said Swanson.

"She'd call them 'girls nights out' where she would take female employees of competitors, get them together and use that as a guise to have these inappropriate discussions about what prices should be charged and what markets each one should play in," said Swanson.

Federal authorities on Wednesday charged two former executives from Heritage, an Eatontown, New Jersey-based company, with fixing prices of generic drugs between April 2013 and December 2015. Heritage said in a statement that it terminated those executives in August, has filed its own civil complaint against the pair and is fully cooperating with the Department of Justice.

A message was left seeking comment with Heritage concerning the 20-state lawsuit.

Besides Heritage, the other drug companies targeted in the lawsuit include Aurobindo Pharma USA Inc.; Citron Pharma LLC; Mayne Pharma Inc.; Mylan Pharmaceuticals Inc.; and Teva Pharmaceuticals USA.

Mylan said it knew of no evidence that it had participated in price fixing. Aurobindo declined to comment. The other companies didn't immediately return requests for comment.

Sharply rising generic drug prices first attracted significant media attention in 2014, and prompted a subsequent Congressional investigation.

Swanson called the alleged scheme "brazen" and said it defied the purpose of allowing generic medicines to compete with name-brand equivalents.

"These generic companies were doing anything but driving down prices," said Swanson. "They were actually inflating prices by agreeing not to compete with each other in a normal marketplace."

The Associated Press contributed to this report.