UnitedHealthcare, fueled by federal probes, sues generics makers for price fixing

Thanks to groundwork laid by state AGs—who've been going after generics companies for alleged price fixing—UnitedHealthcare is suing dozens of copycat drugmakers for essentially the same thing. And the insurance giant is trying to claw back money it spent on allegedly overpriced drugs.

In a 355-page lawsuit, UnitedHealthcare sued the companies for collusion, naming a group of "core conspirators" that includes Teva and Mylan, as well as dozens of other drugmakers. UnitedHealthcare, the largest insurer in the U.S., aims to claw back financial losses it says it suffered because of the inflated prices.

Filed in Minnesota federal court, UnitedHealthcare’s suit leans on government evidence and press reports detailing an industrywide effort by generic drugmakers to artificially jack up prices. The insurer claims the core conspirators directed other generics companies to price their drugs in accordance with their scheme.  

The evidence backing its claims is "well established at this point," the new lawsuit says, pointing to guilty pleas from former execs at small generic drugmaker Heritage Pharmaceuticals, plus a lawsuit from dozens of state attorneys general and an ongoing federal probe. 

"Unprecedented price increases" for drugs named in the suit came with the "absence of any reasonable economic or market explanation for these price increases other than collusion," the suit says. To decide on pricing, the generic drug execs talked by telephone, email and text, and met in person at trade association meetings, the suit claims.

As industry watchers know, UnitedHealthcare's lawsuit is far from the first of its ilk. Rival insurer Humana, for instance, already sued generic drugmakers making the same allegations.

And meanwhile, federal investigators have issued subpoenas to Mylan, Teva, Actavis, Sandoz, Endo, Par Pharmaceuticals, Sun Pharmaceuticals, Impax, Lannett, Mayne, Dr. Reddy’s, Sandoz, Aurobindo and Taro, according to company disclosures. The Department of Justice executed search warrants at offices for Perrigo, Mylan and Aceto, according to the lawsuit. 

All in all, UnitedHealthcare argues the conspiracy was "effective and is still ongoing." It's seeking damages, an injunction and more.  

Government officials have been investigating generic pricing collusion since 2014. Last month, Connecticut Assistant Attorney General Joseph Nielsen told the Washington Post the probe had expanded to 300 drugs. As the new lawsuit notes, the investigation so far has yielded guilty pleas from two former executives of Heritage Pharmaceuticals who are now cooperating with investigators.

Connecticut Attorney General Jepsen and dozens of other attorneys general have also sued generics makers for alleged collusion. The states say the companies referred to the generic drug market as a "sandbox" where they were supposed to "play nice" with one another. Meanwhile, the Department of Justice has its own investigation underway, and criminal charges could come from that effort.

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