States sue generic drug makers alleging collusion to stifle competition

A 50-state coalition filed its third lawsuit in an ongoing antitrust investigation into potential collusion among manufacturers of generic topical drugs.

The coalition’s new complaint alleges that generic drug manufacturers Taro, Perrigo, Actavis and Sandoz agreed to minimize competition and raise prices on dozens of topical products to ensure each company had a “fair share” of the market.

Taro, Perrigo and Sandoz alone sold nearly two-thirds of all generic topical products in the U.S. between 2007 and 2014, according to the suit.

A number of smaller companies are also defendants in the suit, which alleges the companies “understood the rules of the road and took the necessary steps to limit competition among them.”

The lawsuit targets billions of dollars in sales from more than 80 generic drugs the coalition says were artificially inflated. The complaint names 26 companies and 10 individuals that sold the products, according to Pennsylvania Attorney General Josh Shapiro.

Shapiro announced the suit in a statement on Wednesday.

The suit is one of three complaints filed by the coalition in recent years. The first two, one filed in 2016 and the other in 2019, are both pending in the U.S. District Court in the Eastern District of Pennsylvania.

“The deeper we dig, the more we are finding how these companies have ripped off consumers in Pennsylvania,” Shapiro said. “These drug companies are tied together at the hip — they profit while people who need affordable generic drugs suffer. We will continue to hold them accountable to restore competition in the marketplace.”

In its complaint, the coalition states that drug manufacturers had long-standing agreements over several years not to compete for each other’s customers and to follow each other on price increases.

Evidence brought forward by the investigation includes several cooperating witnesses, more than 20 million documents and a phone records database containing millions of call detail records.

“In order to maintain these unlawful agreements, the competitors stayed in nearly constant communication – meeting regularly at trade shows and customer conferences and communicating frequently by phone and text message to reinforce their understandings,” the states wrote in the complaint. “This complaint is replete with examples demonstrating how these understandings manifested themselves with respect to specific products over a period of many years.”

The lawsuit seeks repayment for the alleged inflated prices as well as restoration, civil penalties, costs and fees.