AG Ellison again sues generic-drug manufacturers for conspiracy to fix drug prices and illegally allocate markets

In Minnesota’s third lawsuit against ‘largest cartel in the history of the United States,’ AG Ellison joins coalition of 51 states and territories in suing 26 corporations for fixing prices and allocating markets on 80 topical dermatological drugs

June 12, 2020 (SAINT PAUL) — Attorney General Keith Ellison has joined a coalition of 51 states and territories, led by the State of Connecticut, in another lawsuit against manufacturers of generic drugs for an alleged conspiracy to illegally fix prices and allocate markets, in this instance for 80 generic topical dermatological drugs that account for billions of dollars of sales in the United States alone. The complaint that Attorney General Ellison joined names 26 corporations and 10 individuals as defendants, and seeks damages, civil penalties, and actions by the court to restore competition to the generic drug market.

This is the third lawsuit filed against alleged illegal behavior by generics manufacturers in what has been called “most likely the largest cartel in the history of the United States.”

“This kind of conspiracy has been illegal for more than a century. There’s one simple reason that drug companies still engage in it: greed,” Attorney General Ellison said. “While they lined their pockets, Minnesotans and Americans who suffered from the conditions these drugs are designed to treat emptied theirs. I’m taking these corporations to court for making it harder for Minnesotans to afford their lives and live with basic dignity and respect,” he added.

In February 2020, Attorney General Ellison released the report of his Task Force on Lowering Pharmaceutical Drug Prices. The Task Force found that one of the major causes of the high cost of prescription drugs is anticompetitive conduct in the industry. Several of the report’s 14 recommendations center around requiring more transparency and accountability in the broken and dysfunctional pharmaceutical-drug market.

The current complaint stems from an ongoing investigation built on evidence from several cooperating witnesses at the core of the conspiracy, a massive document database of more than 20 million documents, and a phone-records database containing millions of call detail records and contact information for over 600 sales and pricing individuals in the generics industry. Among the records the states obtained is a two-volume notebook with the contemporaneous notes of one of the states’ cooperators that memorialized his discussions during phone calls with competitors and internal company meetings over a period of several years.

Between 2007 and 2014, three generic drug manufacturers, Taro, Perrigo, and Fougera (now Sandoz) sold nearly two-thirds of all generic topical products dispensed in the United States. The multistate investigation has uncovered comprehensive, direct evidence of unlawful agreements to minimize competition and raise prices on dozens of topical products. The complaint alleges longstanding agreements among manufacturers to ensure a “fair share” of the market for each competitor, and to prevent “price erosion” due to competition.

The complaint is the third filed in an ongoing, expanding investigation. The first complaint was filed in 2016 and now includes 18 corporate defendants, two individual defendants, and 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 in that case.

In May 2019, Attorney General Ellison joined 42 other states and Puerto Rico in filing a second complaint against Teva Pharmaceuticals and 19 other of the nation’s largest generic drug manufacturers for market allocation and price fixing on 112 generic drugs that treat cancer, diabetes, multiple sclerosis, and other conditions. The states are currently preparing for trial on that complaint.

Attorney General Keith Ellison joined Connecticut Attorney General William Tong, who led the coalition, and the attorneys general of Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, District of Columbia, Florida, Georgia, Guam, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Northern Mariana Islands, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Tennessee, Utah, U.S. Virgin Islands, Vermont, Virginia, Washington, West Virginia, and Wisconsin in filing the complaint. A copy of the third complaint is on the website of Connecticut Attorney General William Tong.

The corporate defendants in the third complaint are:

1. Sandoz, Inc.
2. Actavis Holdco U.S., Inc.
3. Actavis Elizabeth LLC
4. Actavis Pharma, Inc.
5. Amneal Pharmaceuticals, Inc.
6. Amneal Pharmaceuticals, LLC
7. Aurobindo Pharma USA, Inc.
8. Bausch Health Americas, Inc.
9. Bausch Health, US LLC
10. Fougera Pharmaceuticals, Inc.
11. G&W Laboratories, Inc.
12. Glenmark Pharmaceuticals Inc., USA
13. Greenstone LLC
14. Lannett Company, Inc.
15. Lupin Pharmaceuticals, Inc.
16. Mallinckrodt Inc.
17. Mallinckrodt plc
18. Mallinckrodt LLC
19. Mylan Inc.
20. Mylan Pharmaceuticals Inc.
21. Perrigo New York, Inc.
22. Pfizer, Inc.
23. Sun Pharmaceutical Industries, Inc.
24. Taro Pharmaceuticals USA, Inc.
25. Teligent, Inc.
26. Wockhardt USA, LLC

Individual Defendants:

1. Ara Aprahamian, the Vice President of Sales and Marketing at Defendant Taro Pharmaceuticals U.S.A, Inc.

2. Mitchell Blashinsky, the Vice President of Marketing for Generics at Defendant Taro Pharmaceuticals USA, Inc. from January 2007 through May 2012, and Vice President of Sales and Marketing at Defendant Glenmark Pharmaceuticals Inc., USA from June 2012 through March 2014.
3. Douglas Boothe, the Chief Executive Officer of Defendant Actavis from August 2008 through December 2012 and the Executive Vice President and General Manager of Defendant Perrigo New York, Inc. from January 2013 through July 2016.
4. James Grauso, the former Vice President of Sales and Marketing at Defendant G&W Laboratories from January 2010 through December 2011; the Senior Vice President, Commercial Operations for Defendant Aurobindo from December 2011 through January 2014; and the Executive Vice President, N.A. Commercial Operations at Defendant Glenmark from February 2014 to the present.
5. Walt Kaczmarek, the Senior Director, National Accounts, Vice President, National Accounts and Senior Vice President, Commercial Operations from November 2004 through November 2012 for Fougera Pharmaceuticals, a division of Nycomed US, Inc. (currently part of Defendant Sandoz, Inc.), and Vice President - General Manager, and President, Multi-Source Pharmaceuticals from November 2013 through August 2016 for Defendant Mallinckrodt.
6. Armando Kellum, the former Vice President, Contracting and Business Analytics at Sandoz.
7. Kurt Orlofski, the President and Chief Executive Officer from April 2007 through August 2009 for Defendant Wockhardt USA, and President of Defendant G&W Labs, Inc. from September 2009 through December 2016. 
8. Mike Perfetto, the Vice President of Sales and Marketing for Defendant Actavis from August 2003 through January 2013, and the Chief Commercial Officer for Defendant Taro from January 2013 through his recent retirement from the company.
9. Erika Vogel-Baylor, the former Vice President for Sales and Marketing for Defendant G&W Labs, Inc. since July 2011.
10. John Wesolowski, the Senior Vice President of Commercial Operations for Defendant Perrigo since February 2004.

Drugs listed in the complaint as subject to price-fixing and market allocation agreements: