Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Drug companies charged in generic digoxin, doxycycline price fixing conspiracy, (May 2, 2016)

By Linda O’Brien, J.D., LL.M.

Generic drug manufacturers engaged in a conspiracy to artificially fix the prices for their generic digoxin and doxycycline drug products, according to a complaint filed in the federal district court in Philadelphia (Fraternal Order of Police, Miami Lodge 20, Insurance Trust Fund v. Lannett Company, Inc., April 27, 2016).

The Fraternal Order of Police, Miami Lodge 20, Insurance Trust Fund is a governmental plan established and funded through contributions from the City of Miami and plan members, who are current and retired sworn officers from the Miami Police Department and their dependents, the complaint alleges.

Digoxin is a heart medication derived from a digitalis plant used to treat atrial fibrillation and other cardiac issues. Doxycycline is an antibiotic used to treat various bacterial infections.

Lannett Company, Impax Laboratories, Sun Pharmaceuticals, West-Ward Pharmaceuticals, Mylan Pharmaceuticals, and Par Pharmaceuticals manufacture and distribute generic digoxin. Lannett, Sun, West-Ward, Allergan plc, Mylan, and Par manufacture or supply generic doxycycline.

Generic drugs are the same as a brand drug in dosage, safety, strength, quality, performance, and intended use, the complaint states. Studies have allegedly shown that the entry of generic drugs onto the market can quickly erode the market share of a branded drug. In addition, Generic competition to brand name drugs can purportedly provide billions of dollars in savings to consumers, pharmacies, health insurers, health and welfare funds, and state Medicaid programs.

According to the complaint, the price for generic digoxin was very stable from January 2005 until October 2013, at which time there was huge and sudden increase. The price increases were caused by abrupt and sudden pricing changes by Lannett, West-Ward, and Impax. Par and Mylan allegedly followed those changes when the companies entered the market in 2014 and 2015, respectively. In September 2013 through November 2013, the price for .125 mg and .250 mg tablets of digoxin reportedly increased more than 750 percent. Data from the National Average Drug Acquisition Cost (NADAC) on generic digoxin show that the defendants acted in concert since each recorded nearly identical price changes for their generic digoxin products during that time frame, the complaint claims.

There was no reasonable justification for the joint shift in pricing conduct by the drug companies, according to the plaintiff. There were allegedly no reports of supply disruption, drug shortages, or new patent or formulation during that time. Also, the number of competitors in the generic digoxin market did not justify such significant price increases. Generic doxycycline prices began to rise in fall 2012 and followed a similar pattern. As a result of the defendants’ pricing behavior, consumers faced serious hardships in purchasing the medications, the plaintiff claims.

Due to the increase in the defendants’ reported profits, Congress and state governments began inquiries into whether a conspiracy took place to increase the prices of generic digoxin and doxycycline. In November 2014, the Department of Justice issued grand jury subpoenas to Lannett, Impax, Par, Allergan, and Mylan to investigate possible Sherman Act violations in the generic pharmaceutical industry.

The complaint also alleges that the generic digoxin and doxycycline markets were at risk of collusion and other anticompetitive behavior, due to: (1) a high degree of industry concentration; (2) significant barriers to entry; (3) inelastic demand; (4) lack of available substitutes; and (5) opportunities to conspire.

The plaintiff asserts claims for unjust enrichment and a conspiracy in restraint of trade in violation of Section 1 of the Sherman Act and various state antitrust laws. The action seeks declaratory and injunctive relief, treble damages, restitution, pre- and post-judgment interest, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 2:16-cv-02031-CMR.

Attorneys: Jayne A. Goldstein (Pomerantz LLP), Natalie Finkelman Bennett (Shepherd Finkelman Miller & Shah, LLP), and Linda P. Nussbaum and Bradley J. Demuth (Nussbaum Law Group, P.C.) for Fraternal Order of Police, Miami Lodge 20, Insurance Trust Fund.

Companies: Lannett Company, Inc.; Impax Laboratories, Inc.; West-Ward Pharmaceuticals Corporation; Allergan plc; Mylan Inc.; Par Pharmaceuticals Companies, Inc.; Sun Pharmaceuticals, Inc.

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