CEO and President implicated as price-fixing probe widens

pharmafile | November 1, 2017 | News story | Research and Development, Sales and Marketing Mylan, Teva, biotech, drugs, pharma, pharmaceutical 

A group of states, 45 members-strong, has expanded its probe into the generics pharmaceutical industry by expanding its case to include 18 companies and 15 medicines; it also taken the significant step of going after two big names in the industry.

Rajiv Malik, who is President and Executive Director of Mylan, and Satish Mehta, CEO of India’s Emcure Pharmaceuticals. The states allege that both Malik and Mehta agreed to carve up the market for doxycycline hyclate rather than compete with each other on price, allowing both companies to reap a greater profit.

Further than this, the case also suggests that the two spoke to each other in advance of any potential increases in price on the product.

With the probe targeting such a high-ranking member of Mylan, second only to Heather Bresch, CEO of the company, the announcement has significantly dented confidence in the company. Share price dipped by 6.62% on the announcement.

Mylan released a statement shortly after the news was broken: “We have been investigating these allegations thoroughly and have found no evidence of price fixing on the part of Mylan or its employees. Our review of the Connecticut Attorney General’s press release underpinning the complaint does not change our views. We have asked the various attorneys general leading this case to share with us what information they believe supports these new allegations and, to date, they have not done so. Mylan has deep faith in the integrity of its President, Rajiv Malik, and stands behind him fully. Mylan and Rajiv Malik both intend to defend this case vigorously, and we look forward to the opportunity to present a full defence.”

Wider than Mylan, the lawsuit involves the biggest names in the generics business, including Sandoz, Teva, Sun Pharma, Actavis and Dr. Reddy’s, amongst others.

The case began in 2014, with Connecticut initiated an antitrust investigation after becoming suspicious of certain price increases on generic drugs. The case subsequently snowballed to include a vast number of states and an ever-increasing number of companies.

Connecticut’s Attorney General George Jepsen, who is leading the case, said:

“The generic drug market was conceived as a way to help bring down the cost of prescription medications for American consumers. For years, though, those saving have not been realized, and instead the prices of many generic drugs have skyrocketed. In our original complaint, the states – led by my office – alleged that prices for two generics drugs increased dramatically due to illegal conspiracies between six generic drug manufacturers. When that complaint was filed, I said it was just the tip of the iceberg. Today, we are seeking leave of the court to file an expanded complaint that implicates significantly more companies, significantly more drugs and two individual executives in the illegal conduct.”

The move comes amid wider pricing pressures being placed on the generics industry from the FDA, with the commissioner recently proposing new measures to bring forth greater competition. If the lawsuit finds out that such competition is being stifled by pricing collusion, the fallout could place increasing pressure on the industry to justify price increases.

Ben Hargreaves

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