44 States Suing Pharmaceutical Companies Over Drug Prices, Alleging Conspiracy

Published on May 12, 2019 by Athena Pallas

44 states have jointly filed a lawsuit against 20 pharmaceutical companies, alleging that the companies engaged in a conspiracy to limit competition and inflate drug prices by as much as 1,000%. This lawsuit comes at a time of widespread controversy over the increasing costs of prescription drugs, both name-brand and generic, amid allegations of price gouging, unwarranted price increases for drugs that have been on the market for many years, and dissatisfaction that U.S. consumers in general pay far more for prescription drugs that do people in most other countries, in part because those countries’ governments do not allow drug companies to charge what they get away with charging in this country. Pharmaceutical companies generally respond to these generalized complaints by claiming that their prices are warranted due to the costs of research and development.

The suit accuses Teva Pharmaceuticals USA Inc of being the ringleader of the alleged conspiracy by 20 companies, indicating, according to The Hill, “Apparently unsatisfied with the status quo of ‘fair share’ and the mere avoidance of price erosion, Teva and its co-conspirators embarked on one of the most egregious and damaging price-fixing conspiracies in the history of the United States.” The complaint alleges a price-fixing conspiracy involving 86 prescription drugs for ailments including cancer, diabetes, high cholesterol, and high blood pressure in the time period from July 2013 to January 2015. According to Reuters:

U.S. states filed a lawsuit accusing Teva Pharmaceuticals USA Inc of orchestrating a sweeping scheme with 19 other drug companies to inflate drug prices – sometimes by more than 1,000% – and stifle competition for generic drugs, state prosecutors said on Saturday. …The 20 drug companies engaged in illegal conspiracies to divide up the market for drugs to avoid competing and, in some cases, conspired to either prevent prices from dropping or to raise them, according to the complaint by 44 U.S. states, filed on Friday in the U.S. District Court in Connecticut. …The 500-page lawsuit accuses the generic drug industry, which mainly sells medicines that are off patent and should be less expensive, of a long history of discreet agreements to ensure that companies that are supposedly competitors each get a “fair share.”…The lawsuit also names 15 individuals as defendants who it said carried out the schemes on a day-to-day basis. “The level of corporate greed alleged in this multistate lawsuit is heartless and unconscionable,” Nevada Governor Steve Sisolak said in a statement.

The lawsuit contends, according to Reuters, that “Generic drugs were one of the few ‘bargains’ in the United States healthcare system”, but that now “Prices for hundreds of generic drugs have risen – while some have skyrocketed, without explanation, sparking outrage from politicians, payers and consumers across the country whose costs have doubled, tripled, or even increased 1,000% or more.” The suit seeks rulings from the court to restore competition to the generic drug market, as well as damages and civil penalties. Teva USA, part of Teva Pharmaceutical Ltd., an Israeli Company, has responded disputing the allegations in this lawsuit and pledging to fight it, which is also likely to be the stance of the other 19 drug companies named as defendants in the lawsuit. Of course, with all the profits pharmaceutical companies make, they have more than enough money to pay for a vigorous defense.

Featured image of a generic antibiotic medication unrelated to the lawsuit in this story by Sage Ross – Own work via Wikimedia Commons.