 "pharma, drugs, medicine, pills")
As many as four Indian drugmakers are facing allegations of a huge price-fixing conspiracy in the US aimed at keeping prices of generic drugs artificially high. The companies are Dr Reddy’s Laboratories (DRL), Glenmark Pharmaceuticals, Sun Pharmaceutical Industries, and Emcure Pharmaceuticals.
Two top executives — Pune-based Emcure’s Managing Director Satish Mehta and US-based Mylan NV’s Executive Director Rajiv Malik — were accused on Tuesday of being part of the conspiracy. More executives in the industry are under the scanner.
“Given the direct involvement of executives in this case and the evidence we had implicating them, we felt as a group of antitrust enforcers that it was important to hold these individuals accountable,” Connecticut Assistant Attorney General Joseph Nielsen said in a conference call on Tuesday.
The 243-page complaint — describing how more than a dozen global drugmakers worked together to share the market and avoid a “fight to the bottom” — has come at a time when the US government is putting all efforts to bring down the cost of generic drugs. It is also a setback for Indian drugmakers trying to push more generics in the US market.
Apart from the four Indian drugmakers, other global players that attorney generals from 45 US states and the district of Columbia are seeking to add to the lawsuit include Apotex, Lannett Endo International’s Par Pharmaceutical unit and Novartis’ Sandoz unit. Mylan and Teva Pharmaceutical Industries were among those named earlier.
The multi-year civil investigation, led by Connecticut Attorney General George Jepsen, is naming executives for the first time, as well as expanding the number of drugmakers in the probe to 18 from six, and the number of drugs to 15 from two. Previously, it had focused on an antibiotic and an oral diabetes medication. “Every time we kick a door in, we make new discoveries,” Jepsen told reporters. The attorney generals would seek reimbursement for consumers and states for losses, he added.
The complaint details numerous phone calls and emails between Malik and executives at Emcure and its subsidiary, Heritage Pharmaceuticals, around the time Heritage launched an antibiotic.
It also detailed the high frequency of communication between executives, such as 1,501 calls and text messages between executives and salespeople at Teva and its competitors between July 2013 and 2014. The complaint added that executives had numerous opportunities at annual trade conferences to interact, as well as more private meetings, such as a 2014 steakhouse dinner in Bridgewater, New Jersey, where senior executives from Actavis, Aurobindo, DRL, Lannett and Sun Pharma, among others, were present.
Emcure’s MD Satish Mehta (right) and Mylan NV’s ED Rajiv Malik have been named in the conspiracy. Illustration by Binay Sinha
When a company needed more clients to reach its shares, a competitor with more than its “fair share” would “identify and “walk away” from a customer or customers by informing them of a significant price increase, thus allowing the other company to come in with a lower bid, the filing alleged.
Sun Pharma shares fell 0.8 per cent, DRL’s declined 3.1 per cent, while Glenmark rose 0.7 per cent on the BSE on Wednesday.
The management at Mylan and Emcure backed their executives in separate statements. Mylan said it had “deep faith in the integrity of its president, Rajiv Malik, and stands behind him”. An Emcure spokesperson said: “Emcure strongly disputes the states’ claims and intends to forcefully defend against them. The states’ rhetoric about collusion leading to rising Doxycycline DR prices is completely at odds with the facts. Throughout the time that Emcure is falsely accused of directing Heritage to fix prices and allocate market shares on Doxycycline DR, Heritage never raised the price of the product to a single customer and prices fell overall by 75 per cent. Moreover, Heritage aggressively competed for business, doubling the market share of the incumbent seller, which had a 100 per cent market share before Heritage's entry.”
A spokesperson at Glenmark said: “While we do not comment on ongoing litigation, Glenmark prides itself on conducting its business with the utmost integrity and complying with all applicable laws, rules and regulations.”
DRL said in an email it was “aware of the investigation and will continue to fully cooperate with all authorities”. Spokespersons at Sun Pharma did not respond to queries till the time of going to press.
The civil investigation has run parallel to a criminal probe by the US justice department that has so far led to guilty pleas from two former executives of Heritage.
