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Big Pharma v 44 AGs CONSPIRACY & Anti-Trust - Updated OK AG & Teva

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Posted on May 14 2019

 

Updated 5/28/2019 Teva and OK AG reach $85M settlement, Teva strenuously argues the “settlement is not an admission of guilt or wring doing. See bottom of entry 

 

 

Big Pharma = Greed & Kickbacks 

For those who have followed me on twitter or this blog, then by now you know that Big Pharma has been a bit of a pet project. Specifically their questionable business practices, their price gouging, their lucrative lobbying efforts.

See a few previous entries below.

October 2018 ACA, Pharma, GOP and Trump’s coordinated efforts to sabotage the ACA. All while gas lighting Americans who overwhelmingly support the ACA, found here.

In early April 2019 I published the following:

April 2, 2019 entry Norvartis kickback scheme, DOJ settlements and HHH-OIG reports. Shortly thereafter I follow up with this April  4, 2019 write-up addressing the Big Pharma “kick-back” scheme and the actions of the Department of Justice.

Some of you might also recall in the late Winter and early Spring of 2017, I created a pretty extensive twitter thread and stated to “watch this space”. That twitter thread is long gone but I distinctly remember dissecting the Federal Complaint filed, which cited Big Pharma and Opioids. See 2017 Ohio AG’s Complaint here. At the time of this 2017 suit, I explained why you need to “watch this space”, given this is what many in the legal community labeled as a “watershed moment”.

Nearly two years later, I think that my initial assessment has born “true”. At the time I noted that this suit was the first of its kind and could/would likely give way to the litigation flood gates opening. The reality is Big Pharma yields immense power and deep pockets. According to the OpenSecrets database

 

 

2016 Big Pharma Lobbying:

 

Total for Pharmaceuticals/Health Products: $247,428,814
Total Number of Clients Reported: 400
Total Number of Lobbyists Reported: 1,394
Total Number of Revolvers: 931 (66.8%)

 

See 2016 complete dataset here.

2017 Big Pharma Lobbying

 

Total for Pharmaceuticals/Health Products: $277,404,983
Total Number of Clients Reported: 423
Total Number of Lobbyists Reported: 1,491
Total Number of Revolvers: 980 (65.7%)

See 2017 complete dataset here.

 

2018 Big Pharma Lobbying

 

Total for Pharmaceuticals/Health Products: $281,872,969
Total Number of Clients Reported: 412
Total Number of Lobbyists Reported: 1,449
Total Number of Revolvers: 929 (64.1%)

 See 2018 complete dataset here.

 

And while HealthCare and Big Pharma shouldn’t be a partisan issue, the reality is both political parties have benefitted from Big Pharma’s largesse. With millions of Big Pharma dollars lining the gilded silk pockets of both Republicans and Democrats members of Congress:

 

See 2016 campaign donations here

 

 

See 2018 Campaign donations here.

 

Again this should not be a partisan issue but the problem is DC. As in members of Congress (from both parties) continue to accept millions of dollars from this industry and naturally Congress’ always has its doors are open for business. The notion that the Trump Administration is combating the undue influence from Big Pharma is one of the biggest lies he’s uttered. Granted Trump deserves some acknowledgement for his “policies” to address the growing Opioid Epidemic. But his failure to declare an “actual national emergency” vs (what he actually declared) a “public health emergency” that meant his Opioid Commission’s 2017 (draft) Report left a lot of resources unavailable, especially for State and Local Governments, who are on the front line of the Opioid Crisis.

 

October 2017 Trump Declares Public Health Emergency

 

 

The decision of the Trump Administration to declare a Public Health Emergency (PHE) versus a National Emergency means:

1) by law PHE’s expire every 90 days, thusly they need to be renewed every 90 days. See each 90 day renewal via PHE’s website, found here.

2) under the Trump Administration he has decreased funding for the PHE fund, which would “fund” fighting the Opioid Epidemic.

 

Trump can not say on one hand he and his administration are doing everything they can to address the lives being lost by Opiod overdoses. All while slashing the budget. I now refer you to pages 45 and 58 of the Trump Administration fiscal 2018 HHS Budget Request.

   

In reviewing the Trump Administration Fiscal Year 2019 PHE Fund, I now refer you to pages 47 and 48 of the HHS Budget request. Trump DECREASED PHE funding by

FY 2017 $5,986,000
FY 2018 Annualized CR $5,959,000
FY 2019 President’s Budget $3,900,000

 

Again that’s not my opinion, these are the facts that are affirmed by Trump’s own HHS funding request. The larger issue is the PHE fund has been dramatically decreased yet Trump & his media machine (and delusional motor mouths KellyAnne Conway and Sarah Slanders) want you to believe Trump is doing everything he can to fight the opioid crisis. THEY. LIED. AGAIN. and the Media refuses to report the actual facts. Specifically since Trump declared a “public health emergency” that allows his administration to tap into the PHE fund but it’s now >$3Million under funded since he declared the “emergency”.

 

Further to demonstrate how inept and incompetent the Trump Administration and a majority of Congress actually capitulate to Big Pharma. They are scared to stand up to them, for fear of losing the almighty campaign largesse. The well known and dirty secret in DC. It is flushed with Big Pharma Cash-Money...this means the daunting task of holding Big Pharma accountable typically defaults to State Attorneys General. According to recent data from various agencies like the FDA, CDC, NIH the generic drug sales in America is estimated to be >$74.5 billion that’s roughly 88% of generic pharmaceutical approximately of all prescriptions written in the United States. Talk about Big Money. Power. And Politics.

 

 

Dear Big Pharma...

you’ve been served, bigly

 

Late on May 10, 2019 Connecticut Attorney General Attorney William Tong led a 44-state coalition filing a lawsuit. 👈🏻the embedded hyperlink is from the CT AG’s website and it’s the 507 page complaint.

 

 

Corporate Defendants

      1. Teva Pharmaceuticals USA, Inc.

      2. Sandoz, Inc.

      3. Mylan Pharmaceuticals Inc.

      4. Actavis Holdco US, Inc.

      5. Actavis Pharma, Inc.

      6. Amneal Pharmaceuticals, Inc.

      7. Apotex Corp.

      8. Aurobindo Pharma U.S.A., Inc.

      9. Breckenridge Pharmaceutical, Inc.

      10. Dr. Reddy’s Laboratories, Inc.

      11. Glenmark Pharmaceuticals Inc. USA

      12. Greenstone LLC

      13. Lannett Company, Inc.

      14. Lupin Pharmaceuticals, Inc.

      15. Par Pharmaceutical Companies, Inc.

      16. Pfizer, Inc.

      17. Taro Pharmaceuticals USA, Inc.

      18. Upsher-Smith Laboratories, LLC

      19. Wockhardt USA, LLC

      20. Zydus Pharmaceuticals (USA), Inc.

 

Individual defendants

  1. Ara Aprahamian, Vice President of Sales and Marketing at Taro Pharmaceuticals U.S.A, Inc. David Berthold, Vice President of Sales at Lupin Pharmaceuticals, Inc.

  2. David Berthold, Vice President of Sales at Lupin Pharmaceuticals, Inc. 

  3. James Brown, Vice President of Sales at Glenmark Pharmaceuticals, Inc.  

  4. Maureen Cavanaugh, former Senior Vice President and Chief Commercial Officer, North America, for Teva

  5. Marc Falkin, former Vice President, Marketing, Pricing and Contracts at Actavis

  6. James Grauso, former Senior Vice President, Commercial Operations for Aurobindo from December 2011 through January 2014. Since February 2014, Grauso has been employed as the Executive Vice President, N.A. Commercial Operations at Glenmark

  7. Kevin Green, former Director of National Accounts at Teva from January 2006 through October 2013. Since November 2013, Green has worked at Zydus Pharmaceuticals (USA) Inc. as the Vice President of Sales 

  8. Armando Kellum, former Vice President, Contracting and Business Analytics at Sandoz 

  9. Jill Nailor, Senior Director of Sales and National Accounts at Greenstone 

  10. James Nesta, Vice President of Sales at Mylan

  11. Kon Ostaficiuk, the President of Camber Pharmaceuticals, Inc. 

  12. Nisha Patel, former Director of Strategic Customer Marketing and later, Director of National Accounts at Teva. 

  13. David Rekenthaler, former Vice President, Sales US Generics at Teva 

  14. Richard Rogerson, former Executive Director of Pricing and Business Analytics at Actavis

  15. Tracy Sullivan DiValerio, Director of National Accounts at Lannett

 

The lawsuit names Teva Pharmaceuticals and 19 of the nation's largest generic drug manufacturers. The Plaintiffs are alleging a broad conspiracy to artificially inflate and manipulate prices, reduce competition and unreasonably restrain trade for more than 100 different generic drugs. The lawsuit, “also names 15 individual senior executive defendants at the heart of the conspiracy who were responsible for sales, marketing, pricing and operations.”

 

The drugs at issue account for billions of dollars of sales in the United States, and the alleged schemes increased prices affecting the health insurance market, taxpayer-funded healthcare programs like Medicare and Medicaid, and individuals who must pay artificially-inflated prices for their prescriptions drugs.

 

The lawsuit also alleges that the defendants,Teva, Sandoz, Mylan, Pfizer and 16 other generic drug manufacturers engaged in a broad, coordinated and systematic campaign to conspire with each other to fix prices, allocate markets and rig bids for more than 100 different generic drugs:

 

The drugs span all types, including tablets, capsules, suspensions, creams, gels, ointments, and classes, including statins, ace inhibitors, beta blockers, antibiotics, anti-depressants, contraceptives, non-steroidal anti-inflammatory drugs, and treat a range of diseases and conditions from basic infections to diabetes, cancer, epilepsy, multiple sclerosis, HIV, ADHD, and more. In some instances, the coordinated price increases were over 1,000 percent.

 

And I think we finally figured out that KellyAnne Conway meant about the Bowling Green tragedy and “Girls Night Out” also known as “Women in the Industry” because nothing says business practice like pimping out female medical reps.

 

competitors gather routinely for golf outings, where they have the
opportunity to spend several days at a time together without interruption. One such annual event was organized by a packaging contractor in Kentucky. From September 17-19, 2014, for example, high-level executives from Defendants Teva, Apotex, Actavis, Amneal, Lannett, Par, Zydus and others were invited to a gathering at a country club in Bowling Green, Kentucky

generic pharmaceutical sales representatives also get together regularly for what they refer to as a "Girls Night Out" ("GNO"), or alternatively "Women in the Industry" meeting or dinner. During these events, the sales representatives meet with their competitors and discuss competitively sensitive information.


Many "Women in the Industry" dinners were organized by A.S., a salesperson from non-Defendant Heritage Pharmaceuticals, Inc. who resides in the State of Minnesota.

Other participants in these meetings were employees of generic drug manufacturers located in Minnesota, or salespeople residing in the area.

 

And this is where State AGs are truly pivotal in holding these Big Pharma Cos and Executives accountable. This is textbook conspiracy, anti-trust, anti-competition and all for the unjust enrichment of the Companies and Employees:

 

The Overarching Conspiracy Between Generic Drug Manufacturers –
Playing Nice In The Sandbox:

As a result of these communications, sales and marketing executives in the generic pharmaceutical industry are well aware of their competitors' current and future business plans. This reciprocal sharing of inside information greatly facilitates agreements among competitors to allocate markets to avoid price competition.

 

 

As a general rule, when a Federal Complaint has multiple communication tables, which seek to enumerate the totality and substance of communications (specifically text messages and emails) you might want to reach a settlement agreement with these AGs. Because I can assure you that discovery, as in numerous interrogatories, depositions and various bills of particulars will not only be damning but it will likely be embarrassing for Big Pharma and their Executives/Sales/Marketing employees.

 

For example the following disclosure would make any reasonable company eager to settle this matter. The Plaintiffs have phone logs, text messages, emails and a plethora of documentary evidence. By page 207 I actually lost count of how many charts/tables that are included in this Complaint. 

 

 

Of the 1,389 calls listed in Table 1, 1,234 of them – or 89% – involved
Defendants Green, Patel and Rekenthaler of Teva speaking with competitors.

Of the 941 calls listed in Table 2, 778 of them – or 83% – involved Defendants Patel and Rekenthaler of Teva speaking with competitors (by this time, Defendant Green no longer worked at Teva). Many – though not all – of those communications involve matters that  are addressed throughout this Complaint.

Because it would be too voluminous to list the total number of calls among all of the Defendants, the following graphic shows the interlocking web of communications and relationships between just some of the individuals employed by Teva and its key competitors.

 

Granted this is a civil matter but a cursory review of the Complaint, I could easily see this being used for a criminal matter, forthwith. Between the voluminous text messages, emails, statements (from multiple witnesses) and other investigatory evidence, I would not be shocked if a criminal probe is launched by the DOJ. 

 

 

I am also going to point out that of the 507 pages nearly 29% are either partially redacted or are fully redacted. Meaning one could conclude that the Plaintiffs have multiple cooperating witnesses. From an evidentiary standpoint I’d really like to read the underlying documents as I am sure there are multiple judicially authorized search warrants and likely a few proffers. 

 

 

 

 

As set forth in this (arguably one of the most detailed and comprehensive) Complaint, it paints a devastating picture of greed, power and actual harm.

Connecticut Attorney General William Tomg provided the following statement:

  

We have hard evidence that shows the generic drug industry perpetrated a multi-billion dollar fraud on the American people. We have emails, text messages, telephone records, and former company insiders that we believe will prove a multi-year conspiracy to fix prices and divide market share for huge numbers of generic drugs. These are drugs that people in this country rely on every day for acute and chronic conditions and diseases from diabetes and cancer to depression and arthritis. We all wonder why our healthcare, and specifically the prices for generic prescription drugs, are so expensive in this country—this is a big reason why. This investigation is still in its early stages. We will not stop until these companies and the individuals who orchestrated these schemes are held accountable,"

 

Like I said if anyone of these Pharmaceutical Companies and/or Executives/Sales/Marketing Employees has any common sense, then they will move to a settlement agreement post haste. Otherwise one can only surmise that the evidence the Plaintiffs have could in fact be so damaging that their respective Board of Directors and/or Shareholders will be in for a pretty brutal judicial “awakening”...

 

Prayer for Relief:

I personally found Items C and D a worthwhile read:

 

C: Enjoin and restrain, pursuant to federal and state law, Defendants, their affiliates, assignees, subsidiaries, successors, and transferees, and their officers, directors, partners, agents and employees, and all other persons acting or claiming to act on their behalf or in concert with them, from continuing to engage in any anticompetitive conduct and from adopting in the future any practice, plan, program, or device having a similar purpose or effect to the anticompetitive actions set forth above;

D: Award to Plaintiff States disgorgement of the Defendants' ill-gotten gains and any other equitable relief as the Court finds appropriate to redress Defendants' violations of federal law or state antitrust and consumer protection laws to restore competition; (emphasis added)

 

And lastly with respect to the May 10, 2019 Complaint I would urge you to closely read pages 446 thru 457. The reason? Well what you might not know is yes of course every State has their own statutes, especially in the consumer protection sphere. But what you may not know is the Commonwealth of Pennsylvania has some of the most comprehensive statutes of all 50 States, for example:

Pennsylvania Unfair Trade Practices and Consumer Protection Law (pages 446 thru 453) 

1573. In distributing, marketing and selling generic pharmaceutical drugs to consumers through drug wholesalers and distributors, pharmacy and supermarket chains, and other resellers of generic pharmaceutical drugs and in otherwise engaging in the conduct more fully described herein with respect to the numerous generic pharmaceutical drugs identified herein, the Defendants are engaging in trade or commerce that directly or indirectly harmed the Commonwealth of Pennsylvania and Pennsylvania consumers within the meaning of 73 P. S. § 201-2(3) of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“PUTPCPL”). 

 

Common Law Doctrine against Restraint of Trade (page 454 & 455)

1603. the Defendants have entered into an agreement in restraint of trade to allocate markets and fix prices in each generic drug market identified herein within the Commonwealth of Pennsylvania.

1604. The agreements to allocate customers and to fix pricing as set forth in the preceding counts constitute an unreasonable restraint of trade in violation of Pennsylvania antitrust common law. 

 

Common Law Doctrine against Unjust Enrichment (page 456)

1614. Defendants knew of, and appreciated and retained, or used, the benefits of Commonwealth of Pennsylvania and Pennsylvania consumers’ purchases of any of the Defendants’ numerous generic pharmaceutical drugs identified herein at amounts far in excess of the competitive price. Defendants engaged in the conduct described herein to increase the market share of the numerous generic pharmaceutical drugs identified herein thereby increasing their sales and profits.

1615. For those customers that purchase directly or indirectly from Defendants at artificially inflated and supra-competitive prices, Defendants have increased prices above what would have prevailed in a competitive and fair market; thereby, directly benefiting Defendants in the form of increased revenues. 

 

This is an illustrative and substantive example of why E pluribus unum really is America at its finest. Meaning that having 44+ Plaintiffs allows them to draw from their own Statutes and effectively with somewhat surgical precision hold Big Pharma accountable. 

 

 

Previous & Related Case(s)

 

It is also worth noting that this is the second such complaint. 

 

In July 2014, the state of Connecticut initiated an investigation of the reasons behind suspicious price increases of certain generic pharmaceuticals. The investigation, which Connecticut is leading, is ongoing as to a number of additional generic drugs, generic drug companies and key executives, and has already resulted in a pending lawsuit against six generic drug-makers that alleges  a well-coordinated and long-running conspiracy to fix prices and allocate markets for doxycycline hyclate delayed release, an antibiotic, and glyburide, an oral diabetes medication.Heritage Pharmaceuticals, Inc. – based in Eatontown, New Jersey – is a defendant in the states' litigation.

 

Which resulted in May 2017 settlement agreement of two former executives of a New Jersey-based generic pharmaceutical manufacturer.  The settlement and cooperation agreements with 41 states and territories that are investigating what “they allege is widespread anticompetitive activity in the generic drug industry that has led to higher prices for consumers and state governments. Attorney General George Jepsen formally announced said settlement and cooperation agreement, see full statement here:

 

Mr. Jason Malek, the former president of Heritage Pharmaceuticals, Inc., and Mr. Jeffrey Glazer, the former chairman and chief executive officer of Heritage Pharmaceuticals, Inc. – each residents of New Jersey – have entered into settlement agreements with the investigating states in which they have agreed to cooperate in the states' ongoing litigation and investigation.

 

click here to view a copy of the settlement with Mr. Glazer

click here for a copy of the settlement with Mr. Malek

 

The 2016 case in the Eastern District of Pennsylvania (EDPA)can be found via this Connecticut Attorney General link. For you docket wonks the LEAD CASE No: 16-AG-27240

 

As previously mentioned the case in Pennsylvania is still pending a final adjudication however in late February of 2019, the Court Granted the Defendants a partial Motion to Dismiss, but largely denied their over all MTD.

 

See item # 7, not to belabor the point but this case is largely still pending. Alternatively the reasons I linked to the EDPA case is it is connected to the May 2019 Complaint, both in terms of timeframe, anti-competition, price fixing, conspiracy. Again I could be wrong but the May 2019 Complaint is robust both in terms of substance but equally important the State AGs make exemplary “meritorious” arguments. 

 

In short the likelihood of success is incredibly high. It’s also worth noting that do you see any action from the Trump Administration or the Trump DOJ commencing action to hold these pharmaceuticals companies accountable? Hell no you don’t because Trump and Roy Cohn 2.0 Bill Barr would rather “investigate” the investigators versus using the Federal Government resources for the People and to protect Americans from predatory pharmaceutical practices. But MAGA, right?

May 28, 2019 Update

 

In my line of work, if you want to quietly bury a news headline, you release said information just before a holiday weekend. What is odd to me, is today OK AG’s Trial against Johnson and Johnson started today.

 

🌶SpicyFiles-Sidebar🌶 While the vast majority of Americans were focused on the never ending debate of: propane or charcoal to fuel their Memorial Day cook outs. For the record I’d say neither. You need to use actual natural charcoal to achieve the optimum temperature to properly sear those  hamburgers and hotdogs.

And for the love of Angus Beef USDA Prime hamburgers, every time you forcefully press down on a hamburger, I’m fairly certain a baby angel loses its wings and the BBQ gods weep. My other half did that once. They are no longer authorized to tend to our grill, both of them. 

 

So just before noon (EST) on May 26, 2019 the Oklahoma Attorney General (OK AG) tweeted that his office had secured a $85-million settlement with Teva. The OK AG also noted that details of the settlement could take up to tell weeks to finalize.

 

 

Conversely Teva Statement, I’d say that’s some fancy lawyerly “speak”, perhaps I’m jaded but the $85 million settlement is an actual drop in the gigantic profit bucket Teva will make on the “...first generic naloxone spray, which is widely recognized as an essential lifesaving medication to combat opioid abuse”..how incredibly magnanimous of Teva:

The settlement does not establish any wrongdoing on the part of the company; Teva has not contributed to the abuse of opioids in Oklahoma in any way.

The company has resolved this matter in a way that benefits the people who have suffered from abuse of opioids and to help stop the effects of the opioid crisis. Teva continues to keep the long-term stability of the company at the forefront.

 

 

 

Previously Attorney General Hunter announced a historic settlement with two of the largest big pharmaceutical companies:

Attorney General Hunter Announces Historic

$270 Million Settlement with Purdue Pharma

$200 Million to Establish Endowment for OSU Center for Wellness

 

See March 2019 Announcement, additional monies were also secured for:

 

  • $12.5 million will go towards providing funds to directly abate and address the opioid epidemic’s effects in Oklahoma’s cities and counties.

 

  • Purdue will also make a $60 million payment to offset all litigation costs up to this point.

 

  • Purdue will not promote opioids in Oklahoma, including employing or contracting with sales representatives to health care providers in Oklahoma.

 

To read the consent judgement, click here., Pages 10 & 11 itemize the payouts and terms and conditions:

 

 

 

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1 comment

  • Hope ER: May 14, 2019

    This is brilliant Spicy! I worked in the medical field some throughout most of the 90’s. Even back then, I knew Big Pharma was robbing us blind. Still, the thought of anti-competition never entered my mind. Publish this piece on other news sites too please? It is that important and that excellent. Thank you for your detailed, always incredible (and incredibly difficult) work. It keeps me sane, gives me hope and inspiration to keep fighting, trying to help right injustices.

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