Schuyler and others file drug price lawsuit
WATKINS GLEN--Schuyler County has joined with over two dozen municipal governments, and others, in suing the makers of generic drugs over alleged price-fixing.
The county, along with local governments in New York and elsewhere, filed an over 1000-page Summons and Complaint on June 30. It is against more than fifty companies, seeking injunctive relief, damages, and relief from harms that the complaint alleges resulted from an unlawful agreement among the defendants to allocate customers, rig bids, and fix, raise, maintain, and/or stabilize the prices of all of their generic pharmaceutical products.
The lawsuit follows a vote by the county legislature in 2020, authorizing County Attorney Steven Getman to join forces with Napoli Shkolnik PLLC, a New York City law firm "in the investigation and/or prosecution of any legal claim against manufactures of generic pharmaceuticals and/or their executives based upon their actions in fixing prices, allocating markets, and engaging in other antitrust violations or other wrongdoing with respect to generic pharmaceuticals."
According to Getman, the lawsuit is pursuing claims in several areas. These include increased health insurance premiums for county employees, additional workers' compensation costs and higher costs of pharmaceuticals purchased for use by the county jail, all based upon artificially inflated generic drug prices.
Various government agencies have already commenced suit, Getman said, alleging violations of state and federal antitrust laws and consumer protection statutes.
"In 2014, the Department of Justice began an investigation into the pricing of various generic pharmaceuticals," Getman explained. "In the wake of the Federal investigation, in 2017, the state attorneys' general of 48 states brought a civil action alleging price-fixing, market division, and other antitrust violations by 16 defendant pharmaceutical companies related to fifteen (15) generic prescription drugs."
"As alleged, the defendants' anticompetitive conduct falls principally into two categories. First, the defendants, allegedly communicated with each other to determine and agree on how much market share each would control and which customers each competitor was entitled to. Second, competitors allegedly communicated -- either in person, by telephone, or by text message -- and agreed to collectively raise and/or maintain prices for a particular generic drug."
The lawsuits, Getman said, now involve over 100 generic drugs and more than fifty pharmaceutical defendants.
"As noted, hundreds of generic drugs have been implicated nationwide. Each affected county or municipality can bring an action asserting overpayments for each applicable generic drug," Getman said. "The key question in formulating a lawsuit was determining for which generic drug(s) each county has overpaid, and whether each was direct or indirect purchaser of same."
According to County Administrator Tim O'Hearn, the lawsuit was filed at no risk to the county, as Napoli Shkolnik is working on a contingency basis that covers all costs associated with the lawsuit.
"By going forward with the litigation, the county legislature hopes to lessen the burden to taxpayers and seeks to hold manufacturers responsible for any unlawful role in the high cost of generic drugs," O'Hearn said.
Locally, along with Schuyler County, Chemung, Yates and Livingston Counties are acting as plaintiffs in the lawsuit. Other municipalities in New York and elsewhere are part of the case as well. The case is currently scheduled to be heard in Federal District Court in eastern Pennsylvania.
In addition to the generics case, Schuyler County has been working with Napoli Shkolnik to prosecute a pending action against the manufacturers and distributors of prescription opiates for damages to the county arising out of the fraudulent and negligent marketing and distribution of opiates in and to the county. That case remains pending in state court.
A related trial, involving Nassau and Suffolk Counties, and the New York State Attorney General's Office, is now underway on Long Island against several companies accused of fueling the opioid crisis. The trial on Long Island will be used as a test for the claims made by Schuyler County and other municipalities in New York.
A copy of the June 30 complaint is available here: https://tinyurl.com/schuylergeneric2021PA