In the spring of 2013, two businessmen from an American subsidiary of an Indian generics manufacturer travelled to Pune to visit their parent company, Emcure Pharmaceuticals. They met Satish Mehta, Emcure’s billionaire chief executive, to discuss the upcoming launch of a drug called Doxy DR.

Doxy DR (doxycycline hyclate delayed-release) is a simple molecule—a delayed-release antibiotic often prescribed for severe acne. The businessmen from New Jersey-based Heritage Pharmaceuticals wanted to manufacture this profitable drug.

The catch: The market was entirely cornered by Heritage’s competitor, Mylan N.V., so its entry had to be carefully orchestrated. Jason Malek, the then vice-president of commercial operations at Heritage, and Jeffrey Glazer, the then CEO, allegedly requested Mehta to open a channel of communication with Rajiv Malik, president of Mylan.

Within weeks, Mylan and Heritage employees allegedly began exchanging phone calls, text messages and emails discussing Doxy DR in what may amount to textbook anti-competitive behaviour. These allegations were made in court filings last month in a landmark antitrust lawsuit filed by 46 US states against generics manufacturers. By summertime, Mylan and Heritage had neatly divvied up the market without any price erosion.

The detailed complaint allows, for the first time, a reconstruction of alleged price-fixing among generics players in America. It implicates at least eight Indian players, including Sun Pharma, Aurobindo, Dr Reddy’s and Glenmark, at a time when Indian companies are booking declining profits in a toughened US marketplace. Furthermore, the allegations mirror an ongoing investigation in India where regulators are investigating Emcure and three other companies over the alleged price-fixing of diabetes drug Vildagliptin. On 13 December, the Competition Commission of India (CCI)—a fair play regulator—sent notices to the four companies.

“The allegations of our complaint are shocking, and the depth and breadth of the conspiracies alleged are mind-blowing,” said George Jepsen, attorney general of Connecticut, who is leading the multistate investigation, in an October press release. The complaint alleges that generics price rigging was an “overarching industry code of conduct.”

Between 2013 and 2015, generics manufacturers sliced and diced the market for at least 15 drugs and fixed prices. The agreements were kept off the books, inked at industry dinners, girls’ nights out and working lunches. Heritage was the ringleader, it states. In 2014 alone, the industry made at least $500 million on drugs that had doubled in price, the complaint alleges.

“This agreement between Heritage, Aurobindo, Citron, Glenmark and Sandoz was part of an overarching conspiracy of the corporate defendants named in the complaint to unreasonably restrain trade in the generic pharmaceutical industry.”

Court filings

The states’ civil lawsuit hints at what is coming in a separate, wide-ranging federal criminal investigation by the US Department of Justice (DOJ) that has more than 30 plaintiffs.

AUTHOR

Gayathri Vaidyanathan

Gayathri writes on health, environment and science. She has reported and produced stories for the Washington Post, Discover, Nature, and the New York Times, amongst other publications. In her last assignment, she was the lead science writer for E&E News in Washington, D.C. E&E News is a news organisation focused on energy and the environment. Over the past decade, Gayathri has travelled across North America, Africa and Asia on long-form reporting projects. She has a master’s in journalism from Columbia University and a bachelor's in biochemistry from McMaster University in Ontario. At The Ken, Gayathri will write on healthcare, the pharmaceutical business and the environment. Based in Bengaluru, you can reach her at gayathri at the rate the-ken.com

View Full Profile

Sign up to our India edition to read this story instantly

To sign up, you’ll create an account that will give you access to a new free story published once a week and archive of 214+ previously published free stories from our India edition. You’ll also receive one email every morning from us introducing the day’s story.

If you’ve already signed up, just enter your email below or login using Facebook or Google.