Press Releases
01/28/2021
Court Unseals States' Latest Generic Drug Complaint, Including Excerpts from "Diary of Collusion" Meticulously Documenting Widespread Price-Fixing
(Hartford, CT) – Attorney General William Tong today released the third full unredacted complaint filed by a coalition of 51 states and territories resulting from its more than six year antitrust investigation into price-fixing in the generic pharmaceutical industry. The states allege that generic drug manufacturers of topical products conspired to artificially inflate and manipulate prices, reduce competition, and unreasonably restrain trade for generic drugs sold across the United States. The complaint was unsealed after the court granted the states' motion to unseal. Among the evidence unsealed are images from the so-called “Diary of Collusion” meticulously documenting widespread price-fixing in the generic drug industry. Excerpts from the diary are interwoven throughout the third complaint.The two notebooks, which a colleague referred to as his “Diary of Collusion,” was provided by a former sales executive who is now cooperating with the investigation. The witness kept detailed contemporaneous notes of the confidential prices and product information shared by competitors. Those notes correlate precisely with emails and phone records obtained through the investigation, which the attorneys general allege demonstrate how confidential information was shared between competitors, and how that information was used to illegally divvy up markets, manipulate prices, and reduce competition.
While the notebook author kept detailed records of his conduct, he became increasingly anxious of the consequences of his behavior, noting to his colleague “we could go to jail for what we are doing.” Others similarly took steps to conceal their actions. For example, Armando Kellum, a senior sales and marketing executive at Sandoz and an individual defendant named in the suit, routinely admonished his subordinates for putting information that was too blatant into e-mails. At one point, Kellum advised one of the states’ cooperators “we need to keep a lid on this, if this gets out, we could get into real trouble.”
“Our case is built on unassailable evidence from multiple cooperating witnesses that paint an undeniable picture of the largest domestic corporate cartel in American history. The Diary of Collusion contains meticulous, contemporaneous notes that corroborate and support what we see across millions of other records compiled through our investigation. These executives knew what they were doing was wrong and that there could be legal consequences for those actions. Americans pay too much for their prescription drugs, and that won’t change until we restore fair and honest competition across the generic drug industry,” said Attorney General Tong.
Generic drugs become available after the patent on the brand drug, which contains the same active ingredient, expires, often resulting in substantially lower prices for the generic drug. When drug companies conspire to artificially inflate the prices of generic drugs, consumers never reap the benefits that lower priced generics are supposed to provide.
The unsealed complaint focuses on 80 topical generic drugs that account for billions of dollars of sales in the United States. The complaint names 26 corporate defendants and 10 individual defendants. The lawsuit seeks damages, civil penalties, and actions by the court to restore competition to the generic drug market.
The complaint is the third filed in the states’ wide-ranging investigation into price-fixing in the generic pharmaceutical industry. The first complaint, still pending in the U.S. District Court in the Eastern District of Pennsylvania, was filed in 2016 and now includes 18 corporate defendants, two individual defendants, and 15 generic drugs. The second complaint was filed in 2019 against Teva Pharmaceuticals and 19 of the nation’s largest generic drug manufacturers. The complaint names 16 senior executives as individual defendants. The states are currently preparing for trial on that complaint.
Attorney General Tong led the attorneys general of Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, District of Columbia, Florida, Georgia, Territory of Guam, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Northern Mariana Islands, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Tennessee, Utah, U.S. Virgin Islands, Vermont, Virginia, Washington, West Virginia and Wisconsin in filing the complaint.
Assistant Attorneys General Joseph Nielsen, Laura Martella, Antonia Conti, Rachel Davis, Michael Cole and Christine Miller; Paralegal Gaile Colaresi; and Assistant Attorney General Jeremy Pearlman, chief of the Antitrust and Government Program Fraud Department, are assisting the Attorney General with this matter.
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Elizabeth Benton
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