Trading intel with rivals and searching for 'dirt': Inside the secret communications that allegedly show how big drug companies plotted for years to increase the price of your medicines
Emma Court
Generic drugs make up 90 percent of prescriptions dispensed in the US, and are supposed to be lower cost alternatives to brand-name medications. Getty
Attorneys general for 44 states recently brought a new lawsuitagainst the world's largest generic drugmaker, Teva Pharmaceutical Industries, and 19 other generic drugmakers, alleging that they coordinated to hike the prices of more than 100 different generic drugs.
The lawsuit is the second to be brought as part of an investigation by the states into generic drugs, which are typically thought of as low-cost treatment options. The complaints have brought new scrutiny to the medications' prices and to the business practices of generic drug companies.
Attorneys general for 44 states recently brought a new lawsuitagainst the world's largest generic drugmaker, Teva Pharmaceutical Industries, and 19 other generic drugmakers, alleging that they coordinated to hike the prices of more than 100 different generic drugs.
The lawsuit is the second to be brought as part of an investigation by the states into generic drugs, which are typically thought of as low-cost treatment options. The complaints have brought new scrutiny to the medications' prices and to the business practices of generic drug companies.
Business Insider obtained an unredacted copy of the complaint, which recounts alleged communications between employees of rival companies by way of email, Facebook message, and spreadsheets. The goal was to coordinate on drug pricing and deals with customers, the complaint alleges.
Teva has denied any criminal or civil liability and said it will defend itself vigorously. Mylan also said the complaint contains "unproven allegations" and that it plans to defend itself.
In April 2014, after the drugmaker Mylan hiked prices on more than seven of its drugs, Teva Pharmaceutical Industries, the world's largest generic drugmaker and one of Mylan's biggest rivals, allegedly wanted to increase its prices, too.
Just four days later, Teva employees were sharing detailed breakdowns of those Mylan price increases internally, according to a new lawsuit being brought by 44 states against Teva, Mylan, and 18 other generic drugmakers.
A Teva director, Nisha Patel, wanted even more of what she referred to as "intel," and kept asking as the month dragged on, according to the states' lawsuit.
Patel would only get it in the middle of May 2014, when a Teva employee sent her an email with the subject line "Dirt," according to the lawsuit. The attached spreadsheet had been originally created by a Mylan employee, according to the 44-state complaint.
"Great. More idiots in the market..."
iStock; Samantha Lee/Business Insider
The messages and emails cited by the lawsuit paint a picture of an industry in cahoots, working to avoid competition and maintain a careful equilibrium.
For instance, in 2013, retail giant Walmart allegedly emailed Teva asking for a more competitive price on a generic arthritis drug. Walmart was at the time buying the drug, oxaprozin, from Teva, and a competitor, Pfizer's Greenstone unit, had just started making it.
In the drug industry, companies like Walmart are customers that buy drugs from manufacturers like Teva. The idea is that drugmakers compete to secure the business, resulting in lower prices.
When a colleague forwarded the email request, David Rekenthaler — at the time Teva's vice president of sales for US generics — allegedly responded: "Great. More idiots in the market…" Rekenthaler is also named as an individual defendant in the case, and did not return Business Insider's request for comment.
Teva had cooperated with Pfizer's Greenstone unit to divvy up customers, including ceding business at drug distributor Cardinal Health and pharmacy chain CVS Health to Greenstone, the lawsuit alleges. But Pfizer's Greenstone had allegedly overstepped by approaching Walmart.
"I am pissed," Rekenthaler's Teva colleague allegedly emailed back.
After many calls between the two companies and internally at each one, Greenstone eventually withdrew its Walmart bid, the lawsuit says.
Walmart then came back to Teva, asking for a price proposal, according to the suit. A Teva employee allegedly forwarded that internally, writing just one word, "FUNNY."
Pfizer said in a statement that it denied any wrongdoing, and does not believe it or Pfizer colleagues "participated in unlawful conduct."
"'Polite f-u' letters"
The complaint alleges that the coordination between rivals extended into the fall of 2014, when federal lawmakers started aninquiry into generic drug pricing.
Senator Bernie Sanders of Vermont and Representative Elijah Cummings of Maryland sent letters to 14 drugmakers, asking about the soaring prices of generic drugs, including a more than 8,000%increase for an antibiotic and a 4,000% percent increase on an asthma medication.
By the next day, outside counsel for one of the drugmakers, New Jersey-based Heritage Pharmaceuticals, reported in an email that he had been in touch with lawyers for Mylan and Teva, and that industry group GPhA had also been looped in, according to the complaint.
Based on that, "the consensus at this point is that the responses will be 'polite f-u' letters," the lawyer for Heritage allegedly wrote in an email.
Heritage said it "responded to the inquiry from Senator Sanders and Representative Cummings multiple times with substantive information" in a statement to Business Insider.
Heritage has separately admitted to price fixing for a diabetes medication and agreed to pay more than $7 million in a criminal penalty and civil damages, the Department of Justice announced late last month. Heritage isn't a named defendant in the states' new lawsuit.
GPhA is today called the Association for Accessible Medicines. The group said in a statement that it "is not aware of this letter, and we seek to be a resource for all members of Congress. Current leadership of AAM would consider such a tone to be unprofessional and inappropriate."
There was a congressional hearing later that fall, to which three companies, including Teva, had been invited. None came, Sanders said at the time.
The states' first lawsuit was filed in 2016, and prices of many generic drugs remain "artificially inflated," according to the May lawsuit.
Teva allegedly emailed internally a spreadsheet listing its rival's pricing information, with the subject line "Dirt."44-state unredacted complaint
Teva would incorporate that information into its internal planning about drug price hikes, the complaint says. A Teva list excerpted in the lawsuit shows that internally at Teva, drugs were marked in a spreadsheet as "follow Mylan increase," with the notation "Urgent."
Using this type of "intel" from rival drug companies, lots of spreadsheets, and inflated "fluff" bids to customers, Teva and major competitors worked together to hike the prices of more than 100 different generic drugs, the lawsuit claims.
Teva has previously denied any criminal or civil liability and said it plans to "vigorously" defend itself. It did not return Business Insider's most recent request for comment.
Mylan said in a statement that the complaint "consists of unproven allegations pertaining to Mylan and we continue to remain confident, as we have for years, that the claims will prove meritless when examined in the court of law." Mylan also said it had investigated thoroughly and did not find evidence of price fixing, and that it plans to defend the case vigorously.
The 524-page suit was filed under seal in Connecticut district court last month, with the public version containing many redacted portions. Business Insider obtained an unredacted copy of the complaint which had not previously been made public. It reveals for the first time the Facebook messages, emails and spreadsheets allegedly shared between rival drugmakers and internally at big pharmaceutical companies.
You can read the full complaint here.
Much of the lawsuit focuses on Teva's alleged activity, but it also features other big manufacturers like Novartis's Sandoz unit, Mylan and Pfizer's Greenstone division. Patel is one of 15 individual defendants also named in the complaint. Patel did not return Business Insider's request for comment. Sandoz said in a statement that it believes the claims are without merit and will contest them.
This complaint and another, prior lawsuit first filed in 2016 both came out of a years long investigation by the state attorneys general into spikes in the prices of many common generic drugs.
The latest complaint has a similar focus on generic drugs and names a similar group of generic drugmaker defendants, but has an expanded scope. It describes what Connecticut Attorney General William Tong calls a "multi-billion dollar fraud on the American people." The states are asking for damages, civil penalties, and injunctive relief to make the generic drug market more competitive. The Department of Justice is also conducting an ongoing criminal investigation.
The investigation and subsequent lawsuits have also brought new scrutiny to generic drugs, which are inexpensive versions of brand name medicines that become available once their patents have expired.
Generic drugs make up 90 percent of prescriptions dispensed in the US, and the overwhelming majority are picked up for $20 or less, according to industry group the Association for Accessible Medicines.
They've been touted as part of the solution for the US's high healthcare costs, rooted in free-market competition. But the lawsuits allege that drugmakers worked together to increase their cost, instead, to the detriment of patients and taxpayers.
Read more: A huge lawsuit accuses nearly 20 big drug companies, a billionaire, and 2 brothers-in-law of cozying up to hike drug prices. Here's the inside story.
Teva would incorporate that information into its internal planning about drug price hikes, the complaint says. A Teva list excerpted in the lawsuit shows that internally at Teva, drugs were marked in a spreadsheet as "follow Mylan increase," with the notation "Urgent."
Using this type of "intel" from rival drug companies, lots of spreadsheets, and inflated "fluff" bids to customers, Teva and major competitors worked together to hike the prices of more than 100 different generic drugs, the lawsuit claims.
Teva has previously denied any criminal or civil liability and said it plans to "vigorously" defend itself. It did not return Business Insider's most recent request for comment.
Mylan said in a statement that the complaint "consists of unproven allegations pertaining to Mylan and we continue to remain confident, as we have for years, that the claims will prove meritless when examined in the court of law." Mylan also said it had investigated thoroughly and did not find evidence of price fixing, and that it plans to defend the case vigorously.
The 524-page suit was filed under seal in Connecticut district court last month, with the public version containing many redacted portions. Business Insider obtained an unredacted copy of the complaint which had not previously been made public. It reveals for the first time the Facebook messages, emails and spreadsheets allegedly shared between rival drugmakers and internally at big pharmaceutical companies.
You can read the full complaint here.
Much of the lawsuit focuses on Teva's alleged activity, but it also features other big manufacturers like Novartis's Sandoz unit, Mylan and Pfizer's Greenstone division. Patel is one of 15 individual defendants also named in the complaint. Patel did not return Business Insider's request for comment. Sandoz said in a statement that it believes the claims are without merit and will contest them.
This complaint and another, prior lawsuit first filed in 2016 both came out of a years long investigation by the state attorneys general into spikes in the prices of many common generic drugs.
The latest complaint has a similar focus on generic drugs and names a similar group of generic drugmaker defendants, but has an expanded scope. It describes what Connecticut Attorney General William Tong calls a "multi-billion dollar fraud on the American people." The states are asking for damages, civil penalties, and injunctive relief to make the generic drug market more competitive. The Department of Justice is also conducting an ongoing criminal investigation.
The investigation and subsequent lawsuits have also brought new scrutiny to generic drugs, which are inexpensive versions of brand name medicines that become available once their patents have expired.
Generic drugs make up 90 percent of prescriptions dispensed in the US, and the overwhelming majority are picked up for $20 or less, according to industry group the Association for Accessible Medicines.
They've been touted as part of the solution for the US's high healthcare costs, rooted in free-market competition. But the lawsuits allege that drugmakers worked together to increase their cost, instead, to the detriment of patients and taxpayers.
Read more: A huge lawsuit accuses nearly 20 big drug companies, a billionaire, and 2 brothers-in-law of cozying up to hike drug prices. Here's the inside story.
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