CONCORD — New Hampshire officials expect to join a multistate lawsuit against 20 drug companies, alleging that they conspired to fix prices on generic prescription drugs.
The complaint, filed in U.S. District Court in Connecticut, alleges that Teva Pharmaceuticals and 19 of its competitors “embarked on one of the most egregious and damaging price-fixing conspiracies in the history of the United States.”
It alleges that the generic-drug companies for years “would systematically and routinely communicate with one another directly, divvy up customers to create an artificial equilibrium in the market, and then maintain anti-competitively high prices.”
And these deals were further “refined and coordinated” at regular industry dinners, “girls’ nights out,” lunches, parties and golf outings as well as through phone calls, emails and text messages, the lawsuit alleges.
Last week, two state senators here, Tom Sherman, D-Rye, and Cindy Rosenwald, D-Nashua, called on Gov. Chris Sununu and Attorney General Gordon MacDonald to join the 44 other states that have signed on to the new lawsuit. In their May 15 letter, the senators said the increasing cost of prescription drugs “is one of the most significant challenges facing New Hampshire families.”
And, they said, “the fact that these pharmaceutical companies may have intentionally fixed these prices to feed their bottom line is appalling.”
Associate Attorney General James Boffetti said Friday that attorneys in that office’s consumer protection and anti-trust bureau have been carefully reviewing the 500-plus-page lawsuit with the expectation that the state will sign on to it. “Before we do that, we want to make sure that we’ve done our due diligence,” he said.
New Hampshire did join a similar action filed in 2017 against six generic-drug makers, said Boffetti, who was chief of the consumer protection bureau then and is now director of the division of legal counsel at the Attorney General’s office. He said attorneys in that bureau spent an estimated 1,400 hours working on that case.
The new lawsuit grew out of the states’ ongoing investigation into generic-drug prices, he said. In addition to the 20 companies, the lawsuit names 15 company executives and cites 114 specific drugs used to treat a variety of medical conditions, such as infections, diabetes, epilepsy, cancer and HIV, that were involved in the alleged price-fixing scheme.
“It’s essentially alleging the same sort of conduct that we filed against them in 2017,” Boffetti said.
On Friday, Boffetti sent a letter to the two senators, telling them the Attorney General’s office is taking “the necessary steps” to join the second lawsuit against the drugmakers. And he said there is no prejudice to the state for doing so later.
“Our years-long involvement in the generics investigation and litigation gives rise to great concern about the alleged conduct of the defendants,” Boffetti wrote. “I assure you that this Office is strongly committed to taking steps that are appropriate and necessary under our authority and New Hampshire law to hold these defendants accountable.”
Sherman, who is a physician, is chairman of the Senate Health and Human Services Committee. The alleged misdeeds of the drug companies affect everyone in New Hampshire, he said.
“All of us are patients,” he said. “All of us have an experience with illness, and hopefully most of us are healthy and don’t need ongoing care, but one of the ways we stay that way is to have access to affordable medications.”
According to the Association for Accessible Medicines, an industry group representing generic-drug companies, generic medications represent 90% of all prescriptions filled, but just 22% of all spending on prescription drugs. And AAM said that 95% of generic prescriptions “are filled for $20 or less.”
In a statement responding to the new lawsuit, AAM said today’s generic-drug industry is “characterized by intense competition.” And it said “illegal behavior, such as price fixing or other violations of antitrust law, is inconsistent with AAM’s rules and procedures.”
But the lawsuit tells a different story.
For years, generic drugs, which come on the market after patents on brand-name medications expire, “were one of the few ‘bargains’ in the United States healthcare system,” the lawsuit states. Congress passed a law in 1984 designed to keep generic-drug prices low, and it worked for a while.
But prices for hundreds of generic drugs have “skyrocketed,” in some cases increasing more than 1,000%, sparking public outrage, according to the court documents. That prompted the state of Connecticut to launch a nonpublic investigation in 2014 into suspicious price increases; shortly thereafter, Congress opened its own inquiry, and the U.S. Department of Justice’s anti-trust division convened criminal grand jury investigations. Other states, including New Hampshire, joined the effort.
Those investigations revealed “illegal collusion among generic drug manufacturers,” according to the lawsuit. Company executives “exploited their interactions at various and frequent industry trade shows, customer conferences and other similar events, to develop relationships and sow the seeds for their illegal agreements,” it alleges.
This conduct was “pervasive and industry-wide” and has caused ongoing and significant harm to the healthcare system, the lawsuit states.
Higher insurance costs
People take generic drugs because they’re supposed to be cheaper, Boffetti said. If the allegations in the lawsuit prove true, he said, “if the scheme was a way to artificially inflate the price of generics because they were colluding to avoid competition, then it’s immensely harmful — and illegal.”
Higher drug prices lead to higher insurance costs, Boffetti said, and those costs get passed on to consumers in the form of higher premiums. In addition, he said, “the harm could also be that people who need drugs, who can’t afford them, won’t get them. It’s too expensive, and they don’t take medication they should be taking.”
In an appearance on the “PBS Newshour” on Thursday, AAM president and CEO Chester Davis Jr. said his members have one mission: “to make sure that they can go and produce safe, high-quality, effective medicines at a price that patients can afford.”
“They aren’t focused on colluding with each other,” he said. “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 they provide.”
The states are seeking a court finding that the drug companies violated federal and state anti-trust and consumer protection laws; they’re looking for damages, civil penalties and “disgorgement of the Defendants’ ill-gotten gains,” according to the lawsuit.
Dr. Sherman said joining the lawsuit is about doing what’s right. And in this case, he said, “What’s right is holding people accountable.”
“What they did, if it’s true, is not just a breach of trust, not just a breach of federal and state statutes, but it hurt people physically,” he said. “It’s like withdrawal of care, making appropriate therapeutics out of reach of people by cost. For the sake of profit.”