A Mahwah-based generic drug manufacturer was among 20 companies accused of participating in what authorities called “one of the most egregious and damaging price-fixing conspiracies in the history of the United States.”
A complaint filed by the 44 states in U.S. District Court in Connecticut also accuses 16 individuals of participating in the scheme.
More than half of the drug companies and five of the individual defendants – all of whom are drug company executives responsible for sales, marketing, pricing and operations -- are from New Jersey.
They include Glenmark Pharmaceuticals Inc. USA, based in Mahwah, and its executive vice president, James Grauso of Mahwah ( see lists below ).
Those charged conspired to artificially inflate the prices of more than 100 generic drugs, in violation of federal and state antitrust and consumer protection laws, state Attorney General Gurbir S. Grewal said Sunday.
These include various classes of medication – among them oral antibiotics, blood thinners, cancer drugs, contraceptives, anti-inflammatory drugs, statins, anti-depressants, medications used to treat HIV, blood pressure medications, “and many more,” he said.
The defendants hatched and carried out their scheme mostly during posh trade shows, cocktail parties, dinners, conferences, golf outings and other face-to-face events.
When communications were reduced to writing or text messages, they often “took overt and calculated steps to destroy evidence” of them, the complaint alleges.
“We all know that prescription drugs can be expensive,” Grewal said. “Now we know that high drug prices have been driven in part by an illegal conspiracy among generic drug companies to inflate their prices,” he said.
The price-fixing scheme caused “significant financial damage to state health plans, taxpayer-funded federal healthcare programs like Medicare and Medicaid, employer-sponsored health plans, and individual consumers who pay out-of-pocket for their generic medications,” Grewal said.
The conspiracy peaked between July 2013 and January 2015, when one of the participants in the alleged conspiracy, Teva Pharmaceuticals USA, Inc., jacked up the prices of 387 formulations of 112 different generic drugs, authorities said.
The amounts varied, with several of the drugs skyrocketing by “well over 1,000 percent,” Grewal said.
The defendants conspired to make sure each would maintain a “fair share” of the various generic drug markets, the New Jersey attorney general said.
At the same time, he said, they colluded to “significantly raise prices on as many drugs as possible.”
Knowing their actions were illegal, corporate conspirators generally chose to talk in person or by cell phone, so as not to create a written record of their conduct, according to the complaint filed by the states.
During their conversations, the defendants frequently used coded terms – “playing nice in the sandbox” and “responsible competitor,” for instance -- to describe their anti-competitive efforts and to reference the industry’s ingrained culture of collusion, it says.
Among the events where the alleged conspiracy was discussed was during a
January 2014 “industry dinner” at a steakhouse in Bridgewater, NJ, which Grewal said was attended by at least 13 high-ranking executives from over five companies.
The complaint alleges violations of the Sherman Act, a federal antitrust law, as well as violations of numerous state anti-trust and consumer fraud laws.
The lawsuit seeks damages, civil penalties and actions by the court to restore competition to the generic drug market.
The lawsuit is the second stemming from a multi-state investigation led by the Connecticut Attorney General.
The first lawsuit, which is still pending in U.S. District Court for the Eastern District of Pennsylvania, was filed in December 2016.
Corporate defendants named in the lawsuit include:
1. Teva Pharmaceuticals USA, Inc., North Wales, PA
2. Sandoz, Inc., Princeton, NJ
3. Mylan Pharmaceuticals Inc., Canonsburg, PA
4. Actavis Holdco US, Inc., Parsippany, NJ
5. Actavis Pharma, Inc., Parsippany, NJ
6. Amneal Pharmaceuticals, Inc., Bridgewater, NJ
7. Apotex Corp., Weston, FL
8. Aurobindo Pharma U.S.A., Inc., Dayton, NJ
9. Breckenridge Pharmaceutical, Inc., Fairfield, NJ
10. Dr. Reddy’s Laboratories, Inc., Princeton, NJ
11. Glenmark Pharmaceuticals Inc. USA, Mahwah, NJ
12. Greenstone LLC, North Peapack, NJ
13. Lannett Company, Inc., Philadelphia, PA
14. Lupin Pharmaceuticals, Inc., Baltimore, MD
15. Par Pharmaceutical Companies, Inc., Chestnut Ridge, NY
16. Pfizer, Inc., New York, NY
17. Taro Pharmaceuticals USA, Inc., Hawthorne, NY
18. Upsher-Smith Laboratories, LLC, Maple Grove, MN
19. Wockhardt USA, LLC, Parsippany, NJ
20. Zydus Pharmaceuticals (USA), Inc., North Pennington, NJ
Individual defendants named in the complaint include:
1. Ara Aprahamian, Bardonia, NY. (Vice President of Sales and Marketing at Taro Pharmaceuticals U.S.A, Inc.)
2. David Berthold, Towaco, NJ. (Vice President of Sales at Lupin Pharmaceuticals, Inc.)
3. James Brown, Littleton, CO. (Vice President of Sales at Glenmark Pharmaceuticals, Inc.)
4. Maureen Cavanaugh, Hatboro, PA. (former Senior Vice President and Chief Commercial Officer, North America, for Teva)
5. Marc Falkin, former Vice President, Westin, FL (Marketing, Pricing and Contracts at Actavis)
6. James Grauso, Ramsey, NJ. (former Senior Vice President, Commercial Operations for Aurobindo from December 2011 through January 2014. Since February 2014, Grauso has been employed as the Executive Vice President, N.A. Commercial Operations at Glenmark)
7. Kevin Green, Chalfont, PA. (former Director of National Accounts at Teva from January 2006 through October 2013. Since November 2013, Green has worked at Zydus Pharmaceuticals (USA) Inc. as the Vice President of Sales)
8. Armando Kellum, Huntington Valley, PA. (former Vice President, Contracting and Business Analytics at Sandoz)
9. Jill Nailor, Mundelein, IL., (Senior Director of Sales and National Accounts at Greenstone)
10. James Nesta, Huntersville, NC (Vice President of Sales at Mylan)
11. Kon Ostaficiuk, Mendham, NJ (President of Camber Pharmaceuticals, Inc.)
12. Nisha Patel, Collegeville, PA (former Director of Strategic Customer Marketing and later, Director of National Accounts at Teva.)
13. David Rekenthaler, Marietta, GA (former Vice President, Sales US Generics at Teva)
14. Richard Rogerson, Flemington, NJ (former Executive Director of Pricing and Business Analytics at Actavis)
15. Tracy Sullivan DiValerio, Marlton, NJ (Director of National Accounts at Lannett)
“It is particularly troubling that so much of this unlawful conduct took place in New Jersey,” Grewal said.
“New Jersey’s pharmaceutical industry is the envy of the world,” he said. “But no New Jersey company will get a free pass when it violates the law and harms our residents, just because it is located here.”
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