US generics industry faces antitrust legal backlash over pricing

By Ben Hargreaves contact

- Last updated on GMT

(Image: Getty/Sharpshutter)
(Image: Getty/Sharpshutter)

Related tags: Teva, Sandoz, Mylan, Glenmark Pharmaceuticals

Teva is at the centre of the allegations made by 44 US states, which suggests a number of companies collaborated to raise prices by as much as 2,000%.

The antitrust lawsuit is based on an investigation that began in 2014 to determine whether market allocation and price fixing agreements had been made between leading generics companies operating in the US market.

The lawsuit suggests​ that the companies involved “would systematically and routinely communicate with one another directly, divvy up customers to create an artificial equilibrium in the market, and then maintain anticompetitively high prices.”

The 500-page lawsuit continues to note that the behaviour of the companies was largely concentrated during 2013 and 2014 – a period in which 75% of pharmacists surveyed by the National Community of Pharmacists Association reported high prices on more than 25 generic drugs, with price increases reaching levels of 2,000% in certain cases.

Once an investigation was initiated by the State of Connecticut, in July 2014, the lawsuit alleges that such price increases ‘slowed dramatically’.

Teva at the centre of the storm

At the centre of the investigation is Teva, which the lawsuit alleges acted to select a ‘core group’ of competitors with which to collude on price increases.

The lawsuit extends to involve companies including Mylan, Sandoz, and Glenmark, with individuals within these companies suggested to be in contact to orchestrate pricing measures.

As a result of the lawsuit, Teva’s share price dropped by 11.8%.

A spokesperson provided a statement regarding the ongoing litigation: “The allegations in this new complaint, and in the litigation more generally, are just that – allegations. Teva continues to review the issue internally and has not engaged in any conduct that would lead to civil or criminal liability.”

“We will continue to vigorously defend the company,”​ the statement concluded.

The lawsuit arrives after a downturn in the US generics market had weighed heavily on Teva, leading it to undertake a global restructure​.

FDA action on promoting generic access

The US Food and Drug Administration (FDA)  reacted to rising generic prices by using its regulatory responsibility to speed access to generic medicine​, in order to use competition to lower prices.

The agency has looked to achieve this through counteracting methods of ‘gaming’​ the current generic drug approval system and by providing additional information​ for those looking to bring through new generic drugs.

Hospital associations took action to try mitigate rising prices by forming​ independent generic drug manufacturing associations.

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