On June 10, 2020, the Attorneys General from forty-six states, the District of Columbia, and four United States territories filed a lawsuit against twenty-six drug manufacturers, accusing them of a long-standing antitrust conspiracy to fix prices on generic topical drugs. The 543-page complaint accuses some of the largest manufacturers of these products—including Pfizer, Perrigo, Sandoz, and Actavis—of maintaining unlawful agreements not to compete for customers and to coordinate pricing, in violation of the Sherman Act and various state antitrust statutes. The complaint describes “nearly constant communication” among Defendants, including meetings at trade shows and customer conferences, in a pattern of conduct that extended throughout much of the industry.
The lawsuit alleges this conspiracy began at least as early as 2009, although the frequency and size of price increases grew exponentially in 2013 and 2014. While generic drug manufacturers have argued these price increases were the result of lawful factors, such as industry consolidation and FDA-mandated plant closures, the complaint maintains the true cause was price fixing resulting from structural changes that “fostered and facilitated collusion.”
While the complaint specifically focuses on topical generic drugs, it references larger systemic price fixing in the generic pharmaceutical industry as a whole, and represents the third antitrust lawsuit against generic drug manufacturers in the last four years. As state attorneys general continue their efforts to crackdown on anti-competitive behavior among pharmaceutical manufacturers, it is likely similar enforcement actions will be filed in the coming years, although the success of these initial three lawsuits will likely influence the scope of future efforts.
This litigation is an important development for antitrust enforcement in the generic pharmaceutical area. The Department of Justice and the Federal Trade Commission have regularly scrutinized competitive activity in the generics area, and the aggressiveness of the State AGs in bringing this case further enhances regulatory enforcement. Moreover, private class action cases usually follow the filing of antitrust price fixing cases, so companies must be aware of this possibility. If you have any questions, please contact Jeffrey S. Jacobovitz in AGG’s Washington, D.C. office.
Jeffrey S. Jacobovitz is Chair of Arnall Golden Gregory’s Antitrust Group and is a former attorney with the Federal Trade Commission. Micah Kanters is a former associate in the Washington, D.C. office of AGG.