Law enforcement authorities from dozens of states fileda federal complaint accusing 20 pharmaceutical companies – including Teva,Sandoz and Pfizer – of conspiring to hike generic drug prices,costing billions of dollars in overcharges and undermining government efforts to hold down medical costs.
New Jersey officials announced the filing on Saturday, saying that costs for drugs were sometimes boosted by more than 10 times what they should have been, and that company officials, knowing they were violating the law, spoke in person or by cellphone "so as not to create a written record of their conduct."
The conspiracy was hatchedat trade shows, co*cktail parties and golf outings, according to a statement by state Attorney GeneralGurbir S. Grewal, who said one of the meetings included more than a dozen high-ranking company executives and was held at a Bridgewater steakhouse, which was not identified in the complaint.
New Jersey joined 43other states in filing the civil lawsuit in federal court in Connecticut on Friday. Eleven of the companies are based in New Jersey while a 12th, Teva, has announced plans to move its U.S. headquarters to the state. The suit also named 15 pharmaceutical executives as defendants, including five New Jersey residents.
"We all know that prescription drugs can be expensive," Grewal said in the statement. "Now weknow that the high drug prices have been driven in partby an illegal conspiracy among generic drug companies to inflate their price."
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The suit called the companies' alleged actions "one of the most egregious and damaging price-fixing conspiracies in the history of the United States." Grewal said that the companies violated federal anti-trust laws and various state laws, including New Jersey's Consumer Fraud Act.
Authorities said the price increases affected common generic drugs, such as those used to control high blood pressure and cholesterollevels, along with drugs used by patients who have HIV. In court documents, they said the conspiracy "thwarted Congress's goal to lower theprices of drugs."
They also alleged that company officials involved in the alleged conspiracy "were aware their conduct was illegal" and made sure to "delete electronic communications after they were made." ATeva executive,authorities said, deleted text messages in 2015 after being warned by a colleague that the government was conducting an investigation and "showing up on people's doorsteps."
Grewal said the companies' executives used codes during conversations, such as "playing nice in the sandbox" to reference what he called the industry's "culture of collusion."
One portion of the complaint is titled "obstruction of justice," with authorities saying company executives had been "coordinating consistently to obstruct the ongoing government investigations and to limit any potential response." The coordination began in 2014, they said,whenCongress began investigating generic drug price increases.
Teva, an Israeli-based company that plans to move its U.S. headquarters to Parsippany, was "a consistent participant in the conspiracies identified in this complaint, but the conduct is pervasive and industry-wide," prosecutors said in court documents.
They said Tevaraisedprices on 112 generic drugs between 2013 and 2015, when the alleged conspiracy was taking place.
"The size of the price increase varied, but a number of them were well over 1,000%," the complaint said.
Teva denied wrongdoing in a statement Saturday, saying that the company "continues to review the issue internally and has not engaged in any conduct that would lead to civil or criminal liability."
Other companies named in the suit did not respond to messages or could not be reached for comment.
Authorities said in court documents that they had obtained images from a Teva database called Delphi, where the company maintainsrecords of all the products it sells "including those decisions that were made collusively."
They said in the complaint, which is more than 500 pages long, that they had been aided "by several as-of-yet unidentified cooperating witnesses who were directly involved in the conduct." They said companies not named in the suit are being investigated, adding thatthey would "likely bring additional actions" at some point.
The companies that aredefendants in the case, authorities said, "are among the largest generic pharmaceutical manufacturers in the industry."
Last year,Gov. Phil Murphy and Teva announced an agreement to move the company's U.S. headquarters from Pennsylvania in exchange for $40 million in tax credits. The deal is expected to bringmore than 800 jobs to the state. Teva has said it plans to expand its existing Parsippany facility to nearly 350,000 square feet.
Before 2012, Teva and other companies had been keeping generic drug costs artificially high by agreeing not to compete with one another, the suit alleges. That year,prosecutors said, the companiesdecided to "take this understanding to the next level."
Other companies named as defendants includedGlenmark Pharmaceuticals of Mahwah andthree companies based in Parsippany. Two of them, Actavis Holdco and Actavis Pharma, are related to Teva,according to the complaint. Wockhardt USA is the other Parsippany company.
In addition to Princeton-based Sandoz, the other New Jersey companies areAmneal of Bridgewater;Aurobindo of Dayton;Breckenridge of Fairfield;Dr. Reddy’s Laboratories of Princeton;Greenstone of Peapack; andZydus of North Pennington.
Pfizer, based in New York City, is among three New York-state based companies that are defendants. The others are Par Pharmaceutical Cos. of Chestnut Ridge and Taro Pharmaceuticals ofHawthorne. Other companies named are Mylan of Canonsburg, Pennsylvania.;Apotex of Weston, Florida.; Lannett of Philadelphia;LupinofBaltimore; and Upsher-Smith Laboratories of Maple Grove, Minnesota.
The five New Jersey residents named are David Berthold,Montville, of Lupin;James Grauso,Ramsey, of Glenmark;Konstantin Ostaficiuk,Mendham, of Camber Pharmaceuticals, which is not named as a defendant;Richard Rogerson,Flemington, formerly ofActavis; andTracy Sullivan DiValerio, Marlton, of Lannett.
None of them responded to messages or could be reached for comment.
