Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Generic drug companies allegedly engaged in price fixing of digoxin and doxycycline drug products, (Mar 28, 2016)

By Linda O’Brien, J.D., LL.M.

Six generic drug manufacturers engaged in a conspiracy to eliminate competition and artificially fix the prices for their generic digoxin and doxycycline drug products in the United States, according to a complaint filed in the federal district court in Philadelphia (NECA-IBEW Welfare Trust Fund v. Allergan plc, March 25, 2016).

Based in Decatur, Illinois, NECA-IBEW Welfare Trust Fund is an employee health and welfare benefit plan for member electrical contractor workers.

Doxycycline is a widely prescribed antibiotic used to treat a variety of skin conditions and bacterial infections. Digoxin is used as an herbal remedy for congestive heart failure.

Lannett Company, Impax Laboratories, the Actavis unit of Allergan plc, and Par Pharmaceutical manufacture and distribute generic digoxin. Lannett, the Actavis unit of Allergan plc, West-Ward Pharmaceutical, Mylan Inc., and Par manufacture generic doxycycline.

According to the complaint, generic drugs are a key component of the healthcare system. The price for generic digoxin was remarkably stable from 2005 until October 2013, at which time the price increased suddenly. The price increases were caused by abrupt and sudden pricing changes by Lannett, West-Ward, and Impax. Par and Mylan followed those changes when the companies entered the market in 2014 and 2015, respectively. For generic doxycycline, a pattern of huge price increases began in October 2012.

There was no reasonable justification for an abrupt shift in pricing conduct by the drug companies, according to the plaintiff. There have been no new patent or formulation of the drugs that could account for the rise in prices. The absence of competitors in the marketplace also did not explain the price increases for generic digoxin and doxycycline. Furthermore, the drug companies have not yet provided an explanation for the price increases, the complaint alleges.

The complaint states that the increase in prices of digoxin and doxycycline led to inquiries by Congress and to Senate hearings. Additionally, in 2014, the U.S. Department of Justice Antitrust Division and Connecticut Attorney General began investigations into whether a conspiracy took place to increase the prices of generic digoxin and doxycycline.

Publicly available data on the generic digoxin and doxycycline markets show that it is susceptible to cartelization by the defendant drug companies, the plaintiff charges. The factors include (1) a high degree of industry concentration; (2) significant barriers to entry; (3) inelastic demand; (4) the lack of available substitutes; (5) a standardized product with a high degree of interchangeability; (6) absence of a competitive fringe of sellers; and (7) communications between competitors.

The complaint also states that the defendants’ conspiracy had the effect of artificially inflating the price of generic digoxin and doxycycline in the United States. As a result, purchasers of digoxin and doxycycline were deprived of free and open competition and paid more for digoxin and doxycycline than they would have absent the defendants’ unlawful conduct.

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

The case is No. 2:16-cv-01371-CMR.

Attorneys: Marc S. Henzel (Law Offices of Marc S. Henzel), David W.Mitchell (Robbins Geller Rudman & Dowd LLP), and Patrick J. O’Hara (Cavanagh & O’Hara) for NECA-IBEW Welfare Trust Fund.

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

News: Antitrust PennsylvaniaNews