7 Indian pharma companies named in US lawsuit over inflating generic drug prices

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The Indian companies named in the lawsuit are Sun Pharma’s US arm Taro, Zydus, Lupin, Aurobindo Pharma, Dr Reddy’s, Wockhardt and Glenmark.

Seven Indian pharmaceutical companies have been named in an antitrust lawsuit filed by 44 states in the United States of America, accusing them of colluding with the Israeli pharma company Teva Pharmaceuticals, which in turn, colluded with 19 other organisations to inflate the prices of generic drugs. According to Reuters, these figures were sometimes inflated by 1000%.

The Indian companies named in the lawsuit are Sun Pharma’s US arm Taro, Zydus, Lupin, Aurobindo Pharma, Dr Reddy’s, Wockhardt and Glenmark. Dr Reddy’s and Aurobindo Pharma are both headquartered in Hyderabad.

Teva is reportedly the world’s largest generic drugs manufacturer. As per the complaint, Teva allegedly raised prices of 112 drugs between July 2013 and January 2015. “Of those 112 different drugs, Teva colluded with its "High Quality" competitors on at least 86 of them (the others were largely in markets where Teva was exclusive). The size of the price increases varied, but a number of them were well over 1,000%,” the complaint states.

As per the complaint, the companies colluded to inflate the prices of generic drugs through “collusive bid rigging and market allocation agreements designed to prevent price wars from occurring.” They reportedly colluded to increase the prices of over 100 different drugs.

As per the complaint, sales representatives of competing companies met at social events such as conferences, golf outings, cocktail parties and lunch. “Defendants use these opportunities to discuss and share competitively-sensitive information concerning upcoming 30 bids, specific generic drug markets, pricing strategies and pricing terms in their contracts with customers,” the complaint further adds.  

This complaint comes after a 2016 lawsuit, which is still in US courts. In December 2016, the Attorney General (AG) of the State of Connecticut along with the Attorneys' General of various other US states filed a lawsuit in Federal Court alleging that Aurobindo Pharma and other companies in the US generic drug industry had violated antitrust laws by fixing prices and allocating customers - the "First State AG Action". The country-wide probe began in 2014, was first filed in 2016, and its scope was expanded in 2018.

Aurobindo Pharma on Tuesday informed stock exchanges that the company, as well as other firms in the US generic drug industry, are facing a second lawsuit for violation of antitrust laws.

In its filing with stock exchanges, Dr Reddy’s said, “We intend to vigorously defend against these allegations and are in the process of filing our response with the District Court of Connecticut.”