Overview
Cohen Milstein represents Direct Purchaser Plaintiffs (“DPPs”), including pharmaceutical wholesalers, in a large multidistrict litigation alleging that numerous manufacturers of generic pharmaceuticals engaged in an anticompetitive scheme to fix and raise prices, rig bids, and allocate markets for hundreds of generic drugs.
Specifically, the DPPs allege that generic manufacturers named in this lawsuit engaged in an industry-wide “Fair Share Agreement” to artificially inflate prices. In connection with this agreement, representatives of the defendants communicated with each other through phone calls, emails, trade association meetings and social events. Knowing that their conduct was unlawful, these representatives went to great lengths to conceal their conduct, including by intentionally destroying evidence that would have supplied direct evidence of their activities. Given the tightly knit nature of this industry, the Fair Share Agreement quickly became part of the rules of the road.
Plaintiffs claim that this conspiracy led them to pay, and continue to pay, supracompetitive prices for these generic drugs.
The United States Department of Justice has opened a criminal investigation and has already secured guilty pleas from three high-ranking pharmaceutical executives. There is also a separate lawsuit pending on behalf of 49 state attorneys general. In addition to the Direct Purchaser class action, the multidistrict litigation involves various other purchasers, including pharmacies and indirect purchasers.
Thus far, over $450 million in total settlements has been recovered by the DPPs.
Case Background
In the pharmaceutical industry, the entry of generic versions of branded drugs should result in aggressive price competition, which, in turn, dramatically reduces prices for all payers. Thus, traditionally, generic drugs have been a relative bargain in healthcare.
However, certain generic manufacturers sought to artificially keep the price of certain generic drugs higher, by engaging in a price-fixing conspiracy. Plaintiffs allege that certain generic manufacturers engaged in an industry-wide Fair Share Agreement, through which they conspired to artificially inflate prices. The agreement resulted in inflated prices for hundreds of generic products.
Because generic drug manufacturers and their employees are repeat players who routinely encounter the same ostensible competitors, their Fair Share Agreement–to eschew price competition and allocate markets and customers–became the rules of the road governing their overarching conspiracy.
Generic manufacturers are alleged to have applied this scheme across multiple drugs and to have been generally aware of other manufacturers’ entire portfolios of generic drugs, as well as pending and/or approved Abbreviated New Drug Applications. As such, achieving a fair share as to one generic drug could involve horse trading across other generic drugs. For instance, generic drug manufacturers might give up customers on one generic drug as a quid pro quo for customers from other generic drug manufacturers on a different generic drug (i.e., “walking away” from business).
The Fair Share Agreement allowed generic drug manufacturers to enjoy high profits without the threat of competition. And as the industry grew more comfortable with the Fair Share Agreement, generic drug manufacturers became bolder and would, at times, substantially raise generic drug prices.
And, from time to time, the manufacturer conspirators periodically rebalanced market share by allocating customers. For instance, rebalancing of market share would occur before a new entrant launched a drug and often involved advanced communications of such entries.
All the while, generic drug manufacturers knew that their conduct was illegal. Plaintiffs allege that they took extensive measures to conceal their activities even, in some instances, intentionally destroying evidence of their incriminating communications.
Plaintiffs claim that as a result of Defendants’ and their generic manufacturer co-conspirators’ efforts to fix, stabilize, and raise prices, rig bids, and engage in market and customer allocation of the drugs identified in this lawsuit, direct purchasers paid, and continue to pay, supracompetitive prices.