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Case 2:17-Cv-03768-CMR Document 3-1 Filed 10/31/17 Page 1 of 243 Case 2:17-cv-03768-CMR Document 3-1 Filed 10/31/17 Page 1 of 243 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA IN RE: GENERIC PHARMACEUTICALS MDL 2724 PRICING ANTITRUST LITIGATION 16-MD-2724 ____________________________________ HON. CYNTHIA M. RUFE IN RE: STATE ATTORNEYS GENERAL LEAD CASE: 16-AG-27240 CASES ____________________________________ THIS DOCUMENT RELATES TO: ALL STATE ATTORNEYS GENERAL ACTIONS November __, 2017 ____________________________________ THE STATE OF CONNECTICUT; THE STATE OF ALABAMA; PLAINTIFF STATES' [PROPOSED] THE STATE OF ALASKA; CONSOLIDATED AMENDED THE STATE OF ARIZONA; COMPLAINT THE STATE OF ARKANSAS; THE STATE OF CALIFORNIA; THE STATE OF COLORADO; THE DISTRICT OF COLUMBIA; THE STATE OF DELAWARE; Public Version THE STATE OF FLORIDA; THE STATE OF HAWAII; THE STATE OF IDAHO; THE STATE OF ILLINOIS; THE STATE OF INDIANA; THE STATE OF IOWA; THE STATE OF KANSAS; THE COMMONWEALTH OF KENTUCKY; THE STATE OF LOUISIANA; THE STATE OF MAINE; THE STATE OF MARYLAND; THE COMMONWEALTH OF MASSACHUSETTS; THE STATE OF MICHIGAN; THE STATE OF MINNESOTA; THE STATE OF MISSISSIPPI; THE STATE OF MISSOURI; THE STATE OF MONTANA; THE STATE OF NEBRASKA; THE STATE OF NEVADA; Case 2:17-cv-03768-CMR Document 3-1 Filed 10/31/17 Page 2 of 243 THE STATE OF NEW HAMPSHIRE; THE STATE OF NEW JERSEY; THE STATE OF NEW MEXICO; THE STATE OF NEW YORK; THE STATE OF NORTH CAROLINA; THE STATE OF NORTH DAKOTA; THE STATE OF OHIO; THE STATE OF OKLAHOMA; THE STATE OF OREGON; THE COMMONWEALTH OF PENNSYLVANIA; THE COMMONWEALTH OF PUERTO RICO; THE STATE OF SOUTH CAROLINA; THE STATE OF TENNESSEE; THE STATE OF UTAH; THE STATE OF VERMONT; THE COMMONWEALTH OF VIRGINIA; THE STATE OF WASHINGTON; THE STATE OF WEST VIRGINIA; THE STATE OF WISCONSIN; v. ACTAVIS HOLDCO U.S., INC.; ACTAVIS PHARMA, INC.; ASCEND LABORATORIES, LLC; APOTEX CORP.; AUROBINDO PHARMA USA, INC.; CITRON PHARMA, LLC; DR. REDDY'S LABORATORIES, INC.; EMCURE PHARMACEUTICALS, LTD.; GLENMARK PHARMACEUTICALS, INC.; HERITAGE PHARMACEUTICALS, INC.; LANNETT COMPANY, INC.; RAJIV MALIK; MAYNE PHARMA INC.; SATISH MEHTA; MYLAN PHARMACEUTICALS, INC.; PAR PHARMACEUTICAL COMPANIES, INC.; SANDOZ, INC.; SUN PHARMACEUTICAL INDUSTRIES, INC.; TEVA PHARMACEUTICALS USA, INC.; ZYDUS PHARMACEUTICALS (USA), INC. Case 2:17-cv-03768-CMR Document 3-1 Filed 10/31/17 Page 3 of 243 TABLE OF CONTENTS I. SUMMARY OF THE CASE .................................................................................................. 1 II. JURISDICTION AND VENUE .............................................................................................. 7 III. THE PARTIES ........................................................................................................................ 8 IV. FACTS SUPPORTING THE LEGAL CLAIMS .................................................................. 15 A. The Generic Drug Market ............................................................................................... 15 1. The Hatch-Waxman Act ............................................................................................ 15 2. The Importance of Generic Drugs ............................................................................. 16 3. The Players in the Drug Distribution System ............................................................ 17 a. Manufacturers/Suppliers ....................................................................................... 17 b. Wholesalers/Distributors ....................................................................................... 20 c. Group Purchasing Organizations (GPOs) ............................................................ 21 d. Pharmacy and Supermarket Chains ...................................................................... 21 e. Customer Incentives .............................................................................................. 22 4. The Cozy Nature of the Industry and Opportunities for Collusion ........................... 24 a. Trade Association and Customer Conferences ..................................................... 24 b. Industry Dinners and Private Meetings ................................................................ 25 5. The Overarching Conspiracy Between Generic Manufacturers – Playing Nice In The Sandbox ................................................................................................. 27 6. Generic Drug Price Spikes Since 2013 ....................................................................... 33 B. The Illegal Schemes ........................................................................................................ 34 1. Market Allocation Agreements to Maintain Market Share ........................................ 34 a. Nimodipine ............................................................................................................ 34 i. The Heritage/Sun Agreement. ........................................................................ 34 ii. The Heritage/Ascend Agreement. ................................................................... 39 b. Zoledronic Acid ..................................................................................................... 42 c. Meprobamate ......................................................................................................... 46 d. Doxy DR ................................................................................................................ 49 i. The Heritage/Mylan Agreement. .................................................................... 49 I. The Large Wholesaler Account ("Wholesaler A") .................................. 51 II. The Large Retail Pharmacy Account ("The Pharmacy") ........................ 52 III. Other Customer Accounts ....................................................................... 54 i Case 2:17-cv-03768-CMR Document 3-1 Filed 10/31/17 Page 4 of 243 ii. The Heritage/Mayne Agreement..................................................................... 56 2. Agreements to Fix Prices ........................................................................................... 61 a. Doxycycline Monohydrate (2013) ........................................................................ 62 b. Heritage 2014 Price Increases ............................................................................... 67 i. Acetazolamide .............................................................................................. 74 ii. Fosi-HCTZ ................................................................................................... 76 iii. Glipizide-Metformin ..................................................................................... 80 iv. Glyburide ..................................................................................................... 81 v. Glyburide-Metformin ................................................................................... 87 vi. Leflunomide.................................................................................................. 90 vii. Nystatin ........................................................................................................ 92 viii. Paromomycin ............................................................................................... 97 ix. Theophylline ER ........................................................................................... 98 x. Verapamil ................................................................................................... 101 C. Consciousness of Guilt .................................................................................................. 104 V. TRADE AND COMMERCE .............................................................................................. 105 VI. MARKET EFFECTS .......................................................................................................... 106 COUNT ONE (BY ALL PLAINTIFF STATES EXCEPT CALIFORNIA AGAINST DEFENDANTS HERITAGE AND SUN, AND ALL OTHER CORPORATE DEFENDANTS UNDER JOINT AND SEVERAL LIABILITY) – HORIZONTAL CONSPIRACY TO ALLOCATE MARKETS AND FIX PRICES FOR THE GENERIC DRUG NIMODIPINE IN VIOLATION OF SECTION 1 OF THE SHERMAN ACT ....................................................... 107 COUNT TWO (BY ALL PLAINTIFF STATES EXCEPT CALIFORNIA AGAINST DEFENDANTS HERITAGE AND ASCEND, AND ALL OTHER CORPORATE DEFENDANTS UNDER JOINT AND SEVERAL LIABILITY) – HORIZONTAL CONSPIRACY TO ALLOCATE MARKETS AND FIX PRICES FOR THE GENERIC DRUG NIMODIPINE IN VIOLATION OF SECTION 1 OF THE SHERMAN ACT ....................................................... 108 COUNT THREE (BY ALL PLAINTIFF STATES EXCEPT CALIFORNIA AGAINST DEFENDANTS HERITAGE AND DR. REDDY'S, AND ALL OTHER CORPORATE DEFENDANTS UNDER JOINT AND SEVERAL LIABILITY) – HORIZONTAL CONSPIRACY TO ALLOCATE MARKETS FOR THE GENERIC DRUG ZOLEDRONIC ACID IN VIOLATION OF SECTION 1 OF THE SHERMAN ACT .............................................................................. 110 COUNT FOUR (BY ALL PLAINTIFF STATES EXCEPT CALIFORNIA AGAINST DEFENDANTS HERITAGE AND DR. REDDY'S, AND ALL OTHER CORPORATE DEFENDANTS UNDER ii Case 2:17-cv-03768-CMR Document 3-1 Filed 10/31/17 Page 5 of 243 JOINT AND SEVERAL LIABILITY) – HORIZONTAL CONSPIRACY TO ALLOCATE MARKETS AND FIX PRICES FOR THE GENERIC DRUG MEPROBAMATE IN VIOLATION OF SECTION 1 OF THE SHERMAN ACT ....................................................... 111 COUNT FIVE (BY ALL PLAINTIFF STATES AGAINST DEFENDANTS HERITAGE, EMCURE AND MYLAN, AND ALL OTHER CORPORATE DEFENDANTS UNDER JOINT AND SEVERAL LIABILITY) – HORIZONTAL
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