Shares of some of the world’s biggest makers of generic drugs dropped Monday, following a new lawsuit by over 40 states accusing the companies of conspiring to fix the price of more than 100 different products in the U.S.
Mylan NV, Novartis AG’s Sandoz unit, and Teva Pharmaceutical Industries Ltd. were among the 20 drugmakers and subsidiaries sued by state attorneys general. More than a dozen executives from the companies were also named in the civil complaint, which was filed in federal court in Connecticut.
The filing is an expansion of a 2016 suit by many of the states, and the Justice Department’s antitrust division is also conducting a criminal investigation. The Justice Department unit’s chief Makan Delrahim said in April that charges would be filed, without specifying timing.
Mylan fell as much as 6% and Teva’s American depositary receipts lost as much as 12%. Shares of Novartis, Allergan Plc, Lupin Ltd., Dr. Reddy’s Laboratories Ltd. and other companies named in the suit dropped as well, amid broader declines in a market already under pressure from fraying trade ties between the U.S. and China.
The expanded lawsuit couldn’t come at a worse time for the generic-drug industry, which is already facing challenges from falling prices and manufacturing problems.
The lawsuit “now includes a much broader list of products and suggests that Teva was in some ways driving the scheme,” said Vamil Divan, an analyst with Credit Suisse Group AG.
The states say the pharmaceutical companies conspired with one another to fix prices and carve up markets for medicines among themselves, rather than compete on price. Executives used industry dinners, cocktail parties and golf outings to perpetuate the scheme, in addition to communicating through text messages and telephone calls, the complaint said.
Kelley Dougherty, a Teva spokeswoman, said last week that the allegations in the lawsuit hadn’t been proven. Mylan didn’t respond to a request for comment last week. Novartis said in a statement that the claims were without merit.
Pfizer Inc.’s Greenstone unit is also named in the suit. Pfizer said in a statement it has cooperated with the Connecticut attorney general and “we do not believe the company or our colleagues participated in unlawful conduct and deny any wrongdoing.”
— Read Drugmakers Turn Up Heat on Insurers, on ThinkAdvisor.