New Jersey among 44 states suing generic drug companies

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Generic drug manufacturing companies based in East Windsor Township, Hopewell Township and Plainsboro Township are being sued by New Jersey and 43 other states for conspiring to artificially boost the prices of more than 100 generic drugs, according to New Jersey Attorney General Gurbir S. Grewal.

East Windsor Township-based Aurobindo Pharma USA Inc., Hopewell Township-based Zydus Pharmaceuticals USA, Inc., and Sandoz Inc. and Dr. Reddy’s Laboratories Inc. – both of which state their offices are in Princeton but are located in Plainsboro Township – are among the 20 generic drug manufacturing companies that are being sued.

Sixteen drug company executives – including five who live in New Jersey – are being sued individually in the lawsuit, which was filed in U.S. District Court in Connecticut. The executives are involved in sales, marketing, pricing and operations.

The lawsuit claims that artificially inflating the prices of generic drugs violated the Sherman Act, which is a federal antitrust law, as well as state consumer protection laws that include the New Jersey Antitrust Act and Consumer Fraud Act, said Grewal.

The lawsuit claims that price-fixing caused financial harm to state- and employer-sponsored health plans, taxpayer-funded programs such as Medicare and Medicaid, and consumers who pay for drugs out of pocket.l

“We all know that prescription drugs can be expensive. Now we know that high drug prices have been driven in part by an illegal conspiracy among drug companies to inflate their prices,” Grewal said.

Oral antibiotics, blood thinners, cancer drugs, contraceptives, anti-inflammatory drugs, statins, anti-depressants, blood pressure medication and medication to treat HIV were among the drugs whose prices were artificially fixed, the lawsuit said.

There was an understanding among the companies that they would cooperate on pricing so each one could maintain a “fair share” of the various generic drug markets, the lawsuit said. The companies agreed to significantly raise prices on as many drugs as possible.

To avoid creating a paper trail of their actions, the lawsuit said, the executives spoke in person or on cell phones. They used code words to describe their efforts when they met at trade shows, social events and golf outings.

Any communications that had to be made in writing or text messages were subsequently destroyed, so there would not be any evidence, Grewal reported.

The lawsuit seeks damages, civil penalties and actions by the court to restore competition to the generic drug market.