Drugmakers Hit with Generic Drug Antitrust Class Action Lawsuits

A healthcare company has filed class action lawsuits against several drug manufacturers claiming they engaged in an anticompetitive scheme by inflating the prices of generic drugs paid by direct purchasers.

Plaintiff KPH Healthcare Services Inc. d/b/a Kinney Drugs Inc. filed four antitrust class action lawsuits against several drug manufacturers, including Actavis Holdco US Inc., Akorn Inc., Dr. Reddy’s Laboratories Inc., Mylan Inc., Novartis AG, Teva Pharmaceuticals USA Inc. and Sun Pharmaceutical Industries Inc.

Generic drugs tend to be priced significantly lower than the brand-name version of the drug. For this reason, generic drugs are often substituted for the brand-name version unless a doctor has specifically indicated that the prescription for the brand-name version must be dispensed as written, the antitrust class action lawsuit says.

Competition for generic drugs results in lower prices for consumers, KPH Healthcare says. The introduction of generic versions also causes sales of the brand-name version of the drug to drop significantly.

According to the generic drug antitrust class action lawsuits, the price of certain generic drugs has increased significantly since 2013 or 2014 even though there were no other factors such as increased costs or supply shortages to drive the price increase. In some cases, the price for the generic version of a drug have risen by more than 1,000 percent.

“Defendants’ dominant market power has allowed them to substantially foreclose the market to rival competition, thereby impairing competition, maintaining and enhancing market power, and enabling defendants to charge plaintiff and the class members inflated prices above competitive levels,” the generic drug price-fixing class action lawsuits allege.

Several of the defendants have reportedly been subpoenaed by the U.S. Department of Justice as part of a federal investigation into drug pricing. State investigations into the drug manufacturers’ generic drug pricing policies are also ongoing, the antitrust class action lawsuits allege.

As part of the federal investigation, the DOJ is reportedly investigating trade associations that allegedly provide drug manufacturers an opportunity to communicate by hosting meetings and industry trade shows.

“At these meetings and trade shows, generic drug manufacturers have opportunities to discuss and share competitively sensitive information, such as pricing, upcoming bids, and consumer contracts,” KPH Healthcare alleges.

According to the antitrust class action lawsuit, at least 13 drug manufacturer executives met at a restaurant in New Jersey in January 2014, at a time when certain generic drug prices were “increasing exponentially.” Sales representatives for generic drug manufacturers reportedly hold regular meetings and dinners at which competitively sensitive information is discussed.

The generic drug price-fixing class action lawsuits accuse the drug makers of violating Section 1 of the Sherman Act. They seek damages, injunctive relief, and attorneys’ fees.

KPH Healthcare is represented by Dianne M. Nast of NastLaw LLC and Michael L. Roberst of Roberts Law Firm PA.

The Generic Drug Antitrust Class Action Lawsuits are KBH Healthcare Services Inc. v. Actavis Holdco US Inc., et al., Case No. 2:17-cv-02555, KPH Healthcare Services Inc. v. Akorn Inc., et al., Case No. 2:17-cv-02553, KPH Healthcare Services Inc. v. Dr. Reddy’s Laboratories Inc., et al., Case No. 2:17-cv-02551, and KPH Healthcare Services Inc. v. Fougera Pharmaceuticals Inc., et al., Case No. 2:17-cv-02552, in the U.S. District Court for the Eastern District of Pennsylvania.