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Humana charges Teva, 36 other pharma companies, with generic price fixing

Their modus operandi was to avoid competition that would normally result in price erosion and savings for purchasers, the lawsuit says.

Susan Morse, Senior Editor

Humana on Friday filed a lawsuit against 37 pharmaceutical manufacturers alleging conspiracy on price fixing in the generic market.

The lawsuit filed in the Eastern District of Pennsylvania on October 18 is similar to one the insurer filed in August 2018, against many of the same pharma companies.

Humana filed the recent 600-page lawsuit alleging a conspiracy to drive up the cost of generic drugs, in some cases by 1,000% or more: Doxazosin Mesylate (1,053%), Fluconazole (1,570%), Nadolol (2,762%), and Oxybutynin Chloride (between 1,100 and 1,500%).

These price increases are consistent with Medicare Part D price increases found by the Government Accountability Office for many of the drugs, court documents said.

Among the defendants, Humana singled out Teva Pharmaceuticals as spearheading what it called the "overarching conspiracy" to leverage a "culture of cronyism in the generic drug industry."

Teva selected a core group of "high quality" conspirators and targeted drugs that Teva and these companies overlapped on for price increases, understanding that they would lead and follow each other's price increases, and did so frequently and successfully, Humana claimed.

This is part of an even larger overarching conspiracy and understanding of how the generic manufacturers fix prices and allocate markets to suppress competition, Humana said.
Teva did not return a request for comment.

Humana said that based on personal knowledge and information made public during ongoing government investigations of the defendants and other generic drug companies, it overpaid for generic drugs based on a conspiracy among the pharma companies and others to blatantly fix the prices.

The defendants' profits increased at the expense of Humana, which wants to recover damages it incurred from "egregious overcharges," the lawsuit said.

U.S. District Court Judge Cynthia M. Rufe approved Humana's request to file portions of the complaint under seal.

WHY THIS MATTERS 

In the pharmaceutical industry, generic drug entry predictably typically results in increased price competition, which reduces the price of drugs for wholesalers, retailers, consumers and third-party payers like Humana, the lawsuit said.

But through orchestrating their conspiracy through secret communications and meetings, both at private and public events, the defendants predetermined market share, fixed prices, and rigged bids on certain drugs, the lawsuit said.

This fair share understanding was often referred to as the "rules of engagement" for the generic drug industry and permeated every segment of the industry, Humana said.

Their modus operandi was to avoid competition among generic manufacturers that would normally result in significant price erosion and significant savings for purchasers, particularly insurers – like Humana – responsible for paying the bulk of the prescription drug costs in the U.S., the lawsuit said.

The public meetings where these communications allegedly took place included trade association functions held by the Generic Pharmaceutical Association, the Healthcare Distribution Management Association, the Efficient Collaborative Retail Marketing organization, the Minnesota Multistate Contracting Alliance for Pharmacy and the Healthcare Supply Chain Association, among others.

Defendants, knowing their conduct was unlawful, limited their communications to in-person meetings, or mobile phone calls, to avoid creating a record of their conduct. When communications were reduced to writing or text messages, defendants often destroyed the evidence of those communications, according to court documents. 

THE LARGER TREND

While the latest complaint from Humana alleges facts to certain drugs listed in court documents, the scheme and conspiracy extends to other generic drugs, including those that are the subject of a Humana lawsuit filed with the same court in August 2018. The suit is still pending.

"This is a similar suit to the litigation we filed in 2018, and includes additional drugs and manufacturers," Humana said.

On August 15, Judge Rufe denied a motion by the defendants to dismiss Humana's overarching conspiracy claims in that case.

The antitrust litigation is also related to another case being overseen by Judge Rufe in Generic Pharmaceuticals Pricing Antitrust Litigation, filed August 5, 2016, with the U.S. as intervenor.

The 37 defendants named in the recent case include Actavis Elizabeth, Actavis HoldCo, Actavis Pharma, Amneal Pharmaceuticals, Apotex, Ascend Laboratories, Aurobindo Pharma, Breckenridge Pharmaceutical, Camber Pharmaceuticals, Citron Pharma, Reddy's Laboratories, Endo International, G&W Laboratories, Generics Bidco, Glenmark Pharmaceuticals, Heritage Pharmaceuticals, Impax Laboratories, Lannett Company, Lupin Pharmaceuticals, Morton Grove Pharmaceuticals, Mylan, Mylan N.V., Mylan Pharmaceuticals, Oceanside Pharmaceuticals, Par Pharmaceutical, Par Pharmaceutical Companies, Sandoz, Sun Pharmaceutical Industries, Taro Pharmaceutical Industries, Taro Pharmaceuticals USA, Teva Pharmaceuticals, Upsher-Smith Laboratories, Valeant Pharmaceuticals International, Valeant Pharmaceuticals North America, Versapharm, Wockhardt USA and Zydus Pharmaceuticals USA.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com