Novartis AG’s Sandoz unit was at the center of a sweeping conspiracy with competitors to raise prices of generic drugs by more than 1,000%, according to the latest U.S. lawsuit by state antitrust enforcers against the industry.
A nationwide group of state attorneys general said in a complaint filed in federal court Wednesday that Sandoz and other drugmakers colluded to artificially inflate prices for more than 80 topical treatments like creams and ointments from 2009 through 2016.
“They are committing a massive fraud on the American people,” Connecticut Attorney General William Tong, who is helping to lead the states’ investigation, said on a press call.
The case is the third major complaint in a six-year investigation by states that accuse pharmaceutical companies of a widespread price-fixing and market-allocation conspiracy. The attorneys general say industry executives engaged in a scheme to stop competing with one another on generic-drug prices and to protect their profits.
The new complaint focuses on common, generic ointments used to treat a variety of skin conditions such as eczema, psoriasis, inflammation caused by allergic reactions, scaly growths caused by sun exposure, and fungal infections like athlete’s foot and ringworm. Nine in 10 drugs used in the U.S. is a generic copy of a name-brand medication.
Tong said the generic drugmakers had created the largest corporate cartel in American history, which cost American consumers billions of dollars because of inflated prices.
Separately, the drugmakers also face a criminal probe by the U.S. Justice Department that has so far led to charges against four executives and criminal settlements with four companies, including Sandoz.
Sandoz in March agreed to pay $195 million to settle the Justice Department’s case. The settlement came after a former Sandoz executive, Hector Armando Kellum, pleaded guilty in February to a price-fixing charge and agreed to cooperate with the Justice Department’s investigation.
Novartis said in a statement that it disagrees with the “broad claims” alleged by the states.
“The individual instances of misconduct at the core of the resolution we reached with the U.S. Department of Justice in March do not support the vast, systemic conspiracy the states allege,” Novartis spokesman Eric Althoff said in an emailed statement. “We take seriously our compliance with antitrust laws, and we will continue to defend ourselves in this matter.”