Chip Davis: Well, in your interview, what I saw, it was very hard to tell if General Tong was talking about present day or a time period that you just referenced, which the 2011-to-'14 time frame. Full candor, that preceded my time at the association. When I came, it was Generic Pharmaceutical Association. We're now AAM. But here's what I will tell you. The reference and the example he uses, because it's the drug he's on, doxycycline, he talks about a price increase back in that time frame that had a significant percentage price increase. Now, remember, percentage price increases off of a low cost look different than a small percentage over a high-priced biologic drug. But do you know what the cost of doxycycline is today? Fourteen dollars for a 30-day supply. He conveniently and the other attorney generals conveniently leave out the fact that there have been 37 straight months of generic price deflation in this industry, in part because of the evolution and the consolidation of health care buyers. This industry is actually facing real sustainability challenges. They aren't focused on colluding with each other. They're trying to figure out a way that they can sustain their business operations, so that patients can continue to benefit from the drugs that they provide.<doc-sep>Gain a global perspective on the US and go beyond with curated news and analysis from 600 journalists in 50+ countries covering politics, business, innovation, trends and more.<doc-sep>Shares of generic drug companies fell on Monday after more than 40 state attorneys general announced they had filed suit against 20 manufacturers of generic medications, alleging a conspiracy to artificially inflate prices and reduce competition. Forty-four states, including New York, alleged in an amended civil antitrust complaint that companies including Teva Pharmaceutical Industries Ltd. TEVA, +1.34% , Mylan N.V. US:MYL , Novartis AG’s NVS, +0.77% Sandoz and Pfizer Inc. PFE, -1.04% had engaged in a broad, coordinated conspiracy to fix prices and rig bids on more than 100 different generic drugs. The complaint alleges that drug executives laid the groundwork for illegal agreements over dinners, cocktail parties and golf outings, along with frequent phone calls, emails and text messages. Shares of Teva were down 16% on Monday, while Mylan stock fell 10%. Shares of Novartis declined 1.7% and Pfizer shares inched down 0.5%. The SPDR S&P Pharmaceuticals ETF XPH, +0.54% fell 4.1%, while the S&P 500 SPX, +0.19% fell 2.3%. The complaint, filed Friday, is the second in an ongoing investigation of the generic drug industry. The first complaint, filed in 2016 and involving 18 defendants and 15 generic drugs, is still pending in the U.S. District Court in the Eastern District of Pennsylvania. Two former executives from New Jersey-based Heritage Pharmaceuticals have since inked settlement agreements and are cooperating with attorneys general on the case. Despite the selloff, any risks from Friday’s complaint “have already been priced into shares,” Colin Scarola of CFRA Research wrote in a Monday note, referring to Mylan and Teva, which were particularly hard-hit. “We think the risks are much the same today as they were last week as the allegations are related to a case that has already been underway for several years and the process will likely take several more years before conclusion.” Related:‘This will likely end badly’: Analysts react to Mylan’s revenue miss and earnings call Also: Declining sales of blockbuster drug drag Teva revenue lower The decline in shares of generic drugmakers came amid a broader stock rout on Monday, sparked by China’s decision to boost tariffs on around $60 million worth of U.S. goods. The S&P 500 and Dow Jones Industrial Average DJIA, +0.03% are on course for their worst May tumble in nearly 50 years.<doc-sep>BOSTON — Attorneys general from more than 40 states are alleging the nation’s largest generic drug manufacturers conspired to artificially inflate and manipulate prices for more than 100 different generic drugs, including treatments for diabetes, cancer, arthritis and other medical conditions. The lawsuit, filed in federal court in Connecticut on Friday, also names 15 individual senior executives responsible for sales, marketing and pricing. Connecticut Attorney General William Tong, a Democrat, said investigators obtained evidence implicating 20 firms. “We have hard evidence that shows the generic drug industry perpetrated a multibillion dollar fraud on the American people,” Tong said. “We have emails, text messages, telephone records and former company insiders that we believe will prove a multi-year conspiracy to fix prices and divide market share for huge numbers of generic drugs.” Tong said the investigation had uncovered a primary reason why the cost of health care — and specifically generic prescription drugs — has been so high in this country. The surging prices of prescription drugs have drawn the attention of a number of politicians across the political spectrum from President Donald Trump to liberal Democratic presidential candidate Sen. Elizabeth Warren of Massachusetts. The new court suit was the second that has been filed in the investigation. The first, filed in 2016, named 18 corporate defendants and two individual defendants. Two former drug company executives entered into settlement agreements and are cooperating with the attorneys general in the investigation. A spokesman for one of the companies named in the suit, Teva Pharmaceuticals USA Inc., a wholly owned subsidiary of Israeli-based Teva Pharmaceuticals Industries Ltd, said Teva hasn’t engaged in any conduct that would lead to civil or criminal liability. “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 Saturday. “The company delivers high-quality medicines to patients around the world and is committed to complying with all applicable laws and regulations in doing so.” Investigators said the drugs covered in the suit account for billions of dollars of sales in the United States. The suit was filed by 43 states and Puerto Rico with Connecticut taking the lead in the probe. The suit alleges that for many years these makers of generic drugs had operated under an agreement not to compete with each other and to settle instead for what these companies referred to as a “fair share” of the market to avoid pushing prices down through competition. But by 2012, the suit says that Teva and the other companies decided to “take this understanding to the next level.” It alleges that “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 suit says that the companies sought not only to maintain their “fair share” of the generic drug market but also to “significantly raise prices on as many drugs as possible.” To accomplish this goal, the suit says that Teva selected a core group of competitors with which it already had “very profitable collusive relationships,” and developed understandings to lead and follow each other’s price increases. The suit contends that this resulted in “many billions of dollars of harm to the national economy over a period of several years.” During a 19-month period beginning in July 2013, the suit says Teva significantly raised prices on approximately 112 different generic drugs and on at least 86 of those drugs colluded with a group it referred to as “high quality” competitors. The suit says that the size of the price increases varied but was over 1,000% for a number of the drugs. The suit says that the defendants knew their conduct was unlawful and usually chose to communicate in person or by cell phone “in an attempt to avoid creating a written record of their illegal conduct.” “When communications were reduced to writing or text messages, defendants often took overt and calculated steps to destroy evidence of those communications,” according to the suit. The civil suit is asking for a finding that the defendants’ actions violated federal and state antitrust and consumer protection laws and is seeking a permanent injunction preventing the companies from continuing the conduct. The suit also seeks reimbursement of profits from the actions and damages to be paid to the state agencies and consumers who were harmed by the drug company practices. Crutsinger reported from Washington.<doc-sep>
Twenty leading drug companies—including Teva Pharmaceuticals, Pfizer, Novartis, and Mylan—were in cahoots for years to fix and dramatically inflate the prices of more than 100 generic drugs, in some cases to raising prices "well over 1,000 percent," according to a lawsuit filed late last week by 44 states. The alleged scheme was intended to ensure that each company was a "responsible competitor" who was "playing nice in the sandbox" to get its "fair share" of profits from the drugs. Those drugs included pills, capsules, ointments, and cream. They range from oral antibiotics, blood thinners, cancer drugs, contraceptives, statins, anti-inflammatory drugs, anti-depressants, blood pressure medications, drugs used to treat HIV, and drugs for ADHD. A full list of the generic drugs can be found here. "We all know that prescription drugs can be expensive," said New Jersey Attorney General Gurbir S. Grewal in a statement. "Now we know that high drug prices have been driven in part by an illegal conspiracy among generic drug companies to inflate their prices." The lawsuit stems from a years-long, multi-state investigation spearheaded 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. That hard evidence included "emails, text messages, telephone records, and former company insiders." And the investigation is still ongoing, Tong added. "We will not stop until these companies and the individuals who orchestrated these schemes are held accountable." Rubbing elbows According to the lawsuit, the alleged shady dealings peaked between July 2013 and January 2015. The companies would routinely get in touch with one another, divide up customers, and set and maintain high prices. Details were usually hashed out in face-to-face encounters during many swanky events such as trade shows, cocktail parties, dinners, conferences, and golf outings. In instances when there was written evidence of the deals, conspirators made plain attempts to destroy it, the states allege. The lawsuit also paints Teva as playing a central role. In the peak timeframe noted in the lawsuit, Teva raised its prices on about 387 formulations of 112 generic drugs. In a press statement, Teva responded saying: "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." Likewise, Pfizer issued a statement Saturday saying its generic-producing subsidiary, Greenstone, "has been a reliable and trusted supplier of affordable generic medicines for decades and intends to vigorously defend against these claims." The lawsuit is the second stemming from the multi-state investigation alleging that the 20 companies and 15 individual drug company executives violated federal and state antitrust laws. The states are seeking damages, civil penalties, and actions from the courts to help overhaul the generic drug market.