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States allege generic drug executives deleted texts, obstructed justice in price cartel probe

Executives of competing generic pharmaceutical companies deleted text messages and worked together to coordinate responses to authorities to obstruct an investigation into an alleged price-fixing cartel, state attorneys general alleged Friday in a civil complaint.

The allegations are part of a sweeping, multiyear probe led by Connecticut’s attorney general’s office into a pervasive system of alleged price-fixing by virtually all of the major companies that sell generic medicine in the United States.

The latest lawsuit focuses heavily on the business of practices of Teva Pharmaceuticals, which is the biggest manufacturer of generic medications in the world. The suit also names multiple executives from Teva and other generic manufacturers as individual defendants.

“That the biggest generic drug manufacturer in the world is one of the leaders of this market-wide collusion is beyond disappointing, and in some ways dispiriting,” said Connecticut Attorney General William Tong in an interview Friday.

“What bothers me about this case is that these are regular people that appear to go to work every day at big companies and break the law,” he said. “It’s the regular everyday-ness of it that bothers me. It is just part of the routine in this industry, and it seems endemic and part and parcel of what they do.”

Connecticut has been leading the multistate investigation since 2014. The Washington Post reported in December that the probe had expanded to more than 300 drugs.

Generic drugs make up about 90% of all prescriptions filled in the United States, while accounting for only about 25% of prescription costs. But consumer groups, state officials, and members of Congress have repeatedly expressed outrage in recent years as generic drugs inexplicably spiked in price.

The states’ investigation, as outlined Friday in the latest complaint, explains why those prices have jumped. State lawyers said the generic drug manufacturers argued publicly that price increases were caused by industry consolidation and FDA-mandated plant closures. But the real reason, the investigators said, “is much more straightforward - illegal collusion among generic drug manufacturers.”

Teva maintained a list of “high quality” competitors that it colluded with, according to the complaint. From July 2013 to January 2015, Teva colluded with those competitors to significantly raise prices on at least 86 drugs, it said.

“Teva had understandings with its highest quality competitors to lead and follow each other’s price increases, and did so with great frequency and success,” the complaint said, “resulting in many billions of dollars of harm to the national economy over a period of several years.”

Teva, headquartered in Israel, had $18.9 billion in revenue in 2019. Teva did not respond to a request for comment Friday afternoon.

A Teva executive named Nisha Patel who worked for the company from 2013 to 2016 exchanged at least 1,240 phone calls and text messages with her counterparts at 16 competing generic companies, investigators said. The suit alleges Patel deleted some text messages after the states began their investigation.

Patel could not be reached for comment. Lead investigators for the state of Connecticut also could not be reached Friday afternoon.

The 465-page suit - under a section titled “Obstruction of Justice” - cites actions by executives from competing companies after Rep. Elijah Cummings, D-Md., and Sen. Bernie Sanders, I-Vt., launched a congressional investigation into generic drugs’ pricing.

“Many of the Defendants have been coordinating consistently to obstruct the ongoing government investigations and to limit any potential response,” the lawsuit said. “This coordination goes back at least as far as October 2014, when Congress first started investigating price increases in the generic drug industry.”

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Key evidence of some of that coordination, a letter from a lawyer for one company, is redacted from the lawsuit.

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