Orange County DA sues drug makers, alleges price collusion

Photo: Chris Potter via Flickr Creative Commons

Listen to story

Download this story 0.0MB

The Orange County District Attorney announced Thursday that he has sued seven pharmaceutical companies for allegedly entering into a deal to artificially inflate the price of a popular cholesterol drug. 

The complaint, filed by Tony Rackauckas in Orange County Superior Court on Tuesday, alleges that the manufacturer of Niaspan paid other drug makers to keep lower-cost generic versions of the medication out of the U.S. market for nearly 10 years. 

The result of such a so-called "pay-to-delay" scheme is that "the drug is artificially kept high in price based on the fact there is no competition from the generic drug," said  Senior Assistant DA Joe D’Agostino, who heads the agency's consumer fraud unit.

That lack of competition cost individual Californians, their insurers and government-run health plans millions of dollars in overpayments for Niaspan, he said.

The lawsuit claims that the pay-to-delay arrangement ran from 2005 until Niaspan's patent expired in 2013.

The complaint alleges that Abbot Laboratories, AbbVie Inc., Duramed Pharmaceuticals, Inc. and Duramed Pharmaceuticals Sales Corp. made illegal payments to generics manufacturers Teva Pharmaceutical Industries, Ltd., Teva Pharmaceuticals USA, Inc. and Barr Pharmaceuticals, Inc. in exchange for their unlawful agreement to hold off on launching a generic version of Niaspan until after the drug's patent expired.

Those activities violated the California Business and Professions code, according to the suit, which seeks restitution and civil penalties.

As to why the Orange County DA's office filed the suit against these national companies, D'Agostino said that California has a statute "that allows us to civilly prosecute any company that we feel committed an unfair business practice." 

Abbot Laboratories was the only defendant drug company that responded to a request for comment. Noting that it had spun its research-based drug business into the new biopharmaceutical firm AbbVie Inc. in Jan. 2013, spokeswoman Elissa Maurer said, "with the separation, the U.S. commercial rights and associated responsibilities for Niaspan passed to AbbVie."

Niaspan was first sold in the US in 1997. Since 2011, its annual sales have exceeded $1.1 billion, according to the DA's office.