Teva Pharmaceutical Industries Ltd. helped mastermind a sweeping conspiracy among generic-drug makers to raise the price of medicines, according to a new antitrust lawsuit filed by states that stems from a five-year investigation of the companies. Teva’s stock fell.
More than a dozen current and former executives at top generic-drug makers, including Mylan NV and a unit of Pfizer Inc., were targeted in the lawsuit made public Friday. The suit was filed by more than 40 states and led by Connecticut Attorney General William Tong.
“We have hard evidence that shows the generic-drug industry perpetrated a multi-billion dollar fraud on the American people,” Tong said in a statement Friday. “We all wonder why our health care, and specifically the prices for generic prescription drugs, are so expensive in this country — this is a big reason why.”
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The lawsuit accuses the drugmakers of inflating prices of more than 100 different drugs, significantly broadening a 2016 complaint. In addition to the states, the Justice Department’s antitrust division is conducting a criminal investigation. The unit’s chief said April 30 that charges would be filed, without specifying timing.
Dinners, Parties and Golf
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. Novartis AG’s Sandoz, Teva’s Actavis unit, and Taro Pharmaceutical Industries Ltd. are also named in the complaint.
The executives named in the complaint are upper-level sales and marketing managers including Maureen Cavanaugh, a former senior vice president for Teva, who is now at Lannett Co., according to the company’s website. James Nesta, Mylan’s vice president of sales, and David Rekenthaler, a former vice president of sales at Teva who is now at Apotex Inc., according to his LinkedIn profile, are also named as defendants.
Mylan President Rajiv Malik was named in a separate complaint filed by state attorneys general in 2017. That complaint is still pending.
“The allegations in this new complaint and in the litigation more generally, are just that — allegations,” Kelley Dougherty, a Teva vice president, said in a statement.