3 NY Companies Conspired In Illegal Drug Price-Gouge Scheme: AG

New York and 43 other states have accused 20 companies – three of which have roots in New York – of illegally conspiring to artificially inflate the prices of more than 100 generic drugs, according to the New York Attorney General's Office. (see list below).

In a lawsuit filed in US District Court, the complaint also names 16 individual defendants – drug company executives responsible for sales, marketing, pricing and operations. They're accused of a systematic conspiracy to fix prices, allocate markets, and rig bids for more than 100 different generic drugs.

The drugs span all types and treat a range of diseases and conditions from basic infections to cancer and epilepsy.

In some instances, the coordinated price increases were over 1,000 percent.

“The evidence shows a multi-year, multi-faceted conspiracy to enrich pharmaceutical companies at the expense of consumers,” New York Attorney General Letitia James said. “The scope of the conspiracy is breathtaking, affecting generic drugs that people rely on every day to treat acute and chronic conditions, like diabetes and arthritis. The blatant anti-competitive conduct alleged in the complaint harmed consumers’ health and well-being in multiple way and we intend to hold the wrongdoers accountable.”

Drugs subject to the unlawful pricing manipulations included all classes of medication, including oral antibiotics, blood thinners, cancer drugs, contraceptives, anti-inflammatory drugs, statins, anti-depressants, medications used to treat HIV, blood pressure medications and many more; and all types, including tablets, capsules, suspensions, creams, gels, and ointments.

The complaint alleges that the collusive activity peaked between July 2013 and January 2015, when one of the participants in the alleged conspiracy, Teva Pharmaceuticals USA, Inc., is alleged to have significantly raised prices on about 387 formulations of 112 different generic drugs

The size of the alleged price increases varies, but a number of drugs saw their prices soar by "over 1,000 percent," according to the release.

Two of the companies are headquartered in the Hudson Valley and one, Pfizer, has a major research and development campus in Orangetown.

Corporate defendants named include the following:

• Teva Pharmaceuticals USA, Inc., North Wales, Pa.
• Sandoz, Inc., Princeton, NJ
• Mylan Pharmaceuticals Inc., Canonsburg, Pa.
• Actavis Holdco US, Inc., Parsippany, NJ
• Actavis Pharma, Inc., Parsippany, NJ
• Amneal Pharmaceuticals, Inc., Bridgewater, NJ
• Apotex Corp., Weston, Fla.
• Aurobindo Pharma U.S.A., Inc., South Brunswick, NJ
• Breckenridge Pharmaceutical, Inc., Fairfield, NJ
• Dr. Reddy’s Laboratories, Inc., Princeton, NJ
• Glenmark Pharmaceuticals Inc. USA, Mahwah, NJ
• Greenstone LLC, North Peapack, NJ
• Lannett Company, Inc., Philadelphia
• Lupin Pharmaceuticals, Inc., Baltimore
• Par Pharmaceutical Companies, Inc., Chestnut Ridge, NY
• Pfizer, Inc., New York City
• Taro Pharmaceuticals USA, Inc., Hawthorne, NY
• Upsher-Smith Laboratories, LLC, Maple Grove, Minn.
• Wockhardt USA, LLC, Parsippany, NJ
• Zydus Pharmaceuticals (USA), Inc., North Pennington, NJ

Individual defendants named in the complaint include:

• Ara Aprahamian, Bardonia, NY. (Vice President of Sales and Marketing at Taro Pharmaceuticals U.S.A, Inc.)
• David Berthold, Towaco, NJ (Vice President of Sales at Lupin Pharmaceuticals, Inc.)
• James Brown, Littleton, Colo. (Vice President of Sales at Glenmark Pharmaceuticals, Inc.)
• Maureen Cavanaugh, Hatboro, Pa. (former Senior Vice President and Chief Commercial Officer, North America, for Teva)
• Marc Falkin, former Vice President, Westin, Fla. (Marketing, Pricing and Contracts at Actavis)
• James Grauso, Ramsey, NJ (former Senior Vice President, Commercial Operations for Aurobindo from December 2011 through January 2014. Since February 2014, Grauso has been employed as the Executive Vice President, N.A. Commercial Operations at Glenmark)
• Kevin Green, Chalfont, Pa. (former Director of National Accounts at Teva from January 2006 through October 2013. Since November 2013, Green has worked at Zydus Pharmaceuticals (USA) Inc. as the Vice President of Sales)
• Armando Kellum, Huntington Valley, Pa. (former Vice President, Contracting and Business Analytics at Sandoz)
• Jill Nailor, Mundelein, Ill., (Senior Director of Sales and National Accounts at Greenstone)
• James Nesta, Huntersville, NC (Vice President of Sales at Mylan)
• Kon Ostaficiuk, Mendham, NJ (President of Camber Pharmaceuticals, Inc.)
• Nisha Patel, Collegeville, Pa. (former Director of Strategic Customer Marketing and later, Director of National Accounts at Teva.)
• David Rekenthaler, Marietta, Ga. (former Vice President, Sales US Generics at Teva)
• Richard Rogerson, Flemington, NJ (former Executive Director of Pricing and Business Analytics at Actavis)
• Tracy Sullivan DiValerio, Marlton, NJ (Director of National Accounts at Lannett)

Knowing their actions were illegal, corporate conspirators generally chose to talk in person or by cell phone, so as not to create a written record of their conduct, the complaint asserts.

During their conversations, the defendant executives frequently used coded terms like "playing nice in the sandbox" and "responsible competitor" to describe their anti-competitive efforts and to reference the industry's engrained culture of collusion.

The industry's many posh trade shows, cocktail parties, dinners, conferences, golf outings and other events provided opportunities for such face-to-face discussions, the complaint notes. And when communications were reduced to writing or text messages, the defendants often "took overt and calculated steps to destroy evidence" of them, according to the release.

Much of the anti-competitive conduct allegedly occurred in New Jersey, where many of the defendants are based. For example, the complaint identifies a January 2014 "industry dinner" at a steakhouse in Bridgewater, which was attended by at least thirteen high-ranking executives from over five companies.

The complaint alleges violations of the Sherman Act, a federal antitrust law, as well as violations of numerous state laws, including New Jersey's Antitrust Act and Consumer Fraud Act.
The lawsuit seeks damages, civil penalties and actions by the court to restore competition to the generic drug market.

The lawsuit is the second stemming from a multi-state investigation led by the Connecticut Attorney General. The first complaint, still pending in U.S. District Court in the Eastern District of Pennsylvania, was filed in 2016 and involves 15 generic drugs. Two former executives from Heritage Pharmaceuticals, Jeffery Glazer and Jason Malek, have entered into settlement agreements and are cooperating with the Attorneys General working group in that case, according to the release.

New York’s investigation has been led by Robert Hubbard and Emily Granrud, both Assistant Attorney Generals in the Antitrust Bureau, and supervised by Beau Buffier, Antitrust Bureau Chief. The Antitrust Bureau is part of the New York Attorney General’s Economic Justice Division, led by Christopher D’Angelo, Executive Deputy Attorney General.

By Tom Davis, Patch National Staff. Patch Editor Lanning Taliaferro contributed to this report.