Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Drug companies charged in generic digoxin, doxycycline price fixing conspiracy, (Sep 9, 2016)

By Linda O’Brien, J.D., LL.M.

Seven generic drug manufacturers engaged in an anticompetitive scheme to fix the prices and eliminate competition for generic digoxin and doxycycline, according to a complaint filed in the federal district court in Philadelphia (UNITE HERE Health v. Allergan plc, September 7, 2016).

Based in Aurora, Illinois, UNITE HERE Health is a trust fund governed by a Board of Trustees comprised of union and employer representatives. The fund provides health benefits to union participants.

Digoxin is prescribed for the treatment of mild to moderate heart failure. Doxycycline is a widely-prescribed antibiotic used for the treatment of a variety of skin conditions and bacterial infections. Allergan plc, Actavis plc, Lannett Company, Impax Laboratories, West-Ward Pharmaceuticals, Mylan Pharmaceuticals, and Par Pharmaceuticals manufacture and sell generic digoxin and doxycycline.

Generic drugs are a staple of American’s health care system and have provided substantially lower cost alternatives to brand name medicines treating common ailments that otherwise would have been cost prohibitive. Historically, after the patent expires for a brand drug, generic versions enter the market and bring prices down, the complaint alleges.

The complaint alleges that the price for generic digoxin remained steady until October 2013, at which time the retail price increased dramatically. The price increases were caused by pricing changes by the defendant drug companies. For example, in November and December 2013, the price for .125 mg and .250 mg tablets of digoxin increased over 750 percent. Data on generic digoxin show price increases that led to identical prices for Lannett’s, West-Ward’s, and Impax’s generic digoxin products. The pricing changes were followed by Mylan and Par when they entered the market in 2014 and 2015, respectively. Similarly, a pattern of astronomical price increases for generic doxycycline began in fall 2012. Data illustrates that the price for .100 mg capsules increased from $2.50 per day for therapy to $11 per day for therapy within three months.

There were no reasonable justifications for the shifts in pricing since there was no supply interruption reported by the defendants. The exorbitant price increases by the generic drug manufacturers led to inquiries by Congress. Additionally, in 2014 the U.S. Department of Justice and Connecticut Attorney General began investigations into whether a conspiracy took place to increase the prices of generic digoxin and doxycycline.

To effectuate their conspiracy, the complaint claims, the defendants participated in meetings to discuss prices and supply of generic digoxin and doxycycline, agreed to manipulate prices and supply of generic digoxin and doxycycline in a manner that deprived purchasers of free and open competition, issued price announcements and quotations in accordance with the conspiracy, sold generic digoxin and doxycycline to customers at non-competitive prices, and provided false statements to the public to explain price increases for generic digoxin and doxycycline.

The complaint also alleges that the characteristics of the generic digoxin and doxycycline markets make them conducive to collusion by the defendant drug companies. The factors include (1) high barriers to entry; (2) inelasticity of demand; (3) generic digoxin and doxycycline are commodity products; (4) the markets for generic digoxin and doxycycline are highly concentrated; and (5) the defendants had ample opportunities to conspire at trade association meetings.

The plaintiff asserts claims for unjust enrichment and a conspiracy in unreasonable restraint of trade in violation of Section 1 of the Sherman Act and various state antitrust laws, as well as for violations of various state consumer protection 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-04818-CMR.

Attorneys: Steven J. Greenfogel (Lite DePalma Greenberg), Steven N. Williams, Adam J. Zapala, and Joyce Chang (Cotchett, Pitre & McCarthy, LLP), and Steven L. Stemerman and Sarah Grossman-Swenson (Davis, Cowell & Bowe, LLP) for UNITE HERE Health.

Companies: UNITE HERE Health; Lannett Company, Inc.; Impax Laboratories, Inc.; West-Ward Pharmaceuticals Corporation; Allergan plc; Actavis, plc; Mylan Pharmaceuticals, Inc.; Par Pharmaceuticals Companies, Inc.

News: Antitrust ConsumerProtection PennsylvaniaNews