U.S. states move to expand generic drug price-fixing lawsuit

By Karen Freifeld

WASHINGTON (Reuters) - A large group of U.S. state attorneys general on Tuesday moved to expand a lawsuit alleging price fixing of generic drugs to 18 companies and 15 medicines on Tuesday, including Novartis AG's generic unit Sandoz and India-based Sun Pharmaceutical Industries Ltd.

The lawsuit, brought by the attorneys general of 45 states and the District of Columbia, also targeted two individual executives, including Rajiv Malik, president and executive director of Mylan Pharmaceuticals Inc. Shares of Mylan, also named as a defendant, fell more than 6 percent after the news, to $35.91.

Mylan said in a statement it had found no evidence of price-fixing by the company or any of its employees, and vowed to defend itself vigorously.

"Mylan has deep faith in the integrity of its president, Rajiv Malik, and stands behind him fully," it said.

In addition to Malik, the states are seeking to sue Satish Mehta, chief executive officer and managing director of Emcure.

The states claim that the drugmakers and executives conspired to fix prices and split up the market for generic drugs, which are intended to deliver lower prices to consumers.

"It is our belief that price-fixing is systematic, it is pervasive, and that a culture of collusion exists in the industry," Connecticut Attorney General George Jepsen, who is leading the case, said at a news conference in Hartford.

The original complaint, filed in December, targeted Emcure Pharmaceuticals' unit Heritage Pharmaceuticals Inc, Aurobindo Pharma USA Inc, Citron Pharma LLC, Mayne Pharma USA Inc, Mylan and Teva Pharmaceuticals USA Inc.

The states are now seeking to file a new complaint that would add Sandoz, Sun, Endo International PLC's unit Par Pharmaceutical, Dr. Reddy's Laboratories, Apotex Corp, Glenmark Generics Ltd, Lannett Company Inc, Alkem Laboratories Ltd's unit Ascend Laboratories and Cadila Healthcare Ltd's unit Zydus Pharmaceuticals Inc.

The news hurt shares of companies named in the expanded suit that are traded in the United States, pulling Lannett down as much as 7 percent. Shares of Endo pared nearly 8 percent off a more than 12 percent gain on the day, which followed the company's earlier estimate it would earn more than expected.

Teva spokeswoman Denise Bradley said the company denied the allegations.

The other companies did not immediately respond to requests for comment.

The expansion of the suit requires the court's permission.

The original lawsuit centered on just two medicines: a delayed-release version of a common antibiotic, doxycycline hyclate; and glyburide, an older drug used to treat diabetes.

The amended complaint would expand the number of drugs to include glipizide-metformin and glyburide-metformin, which are among the most commonly used diabetes treatments.

Others include: acetazolamide, which is used to treat glaucoma and epilepsy; the antibiotic doxycycline monohydrate; the blood pressure medicine fosinopril; the anti-anxiety medicine meprobamate; and the calcium channel blocking agent nimodipine.

The U.S. Department of Justice is conducting a parallel criminal investigation. On Friday, the department asked the Pennsylvania court presiding over the lawsuit to put the lawsuit's discovery process on hold, saying it could interfere with the criminal probe.

Connecticut Assistant Attorney General Joseph Nielsen said Tuesday that the states would likely oppose that request, which could slow the lawsuit.

(Reporting by Karen Freifeld in Washington; Additional reporting by Brendan Pierson in New York; Writing by Diane Bartz; Editing by Chris Sanders and Will Dunham)