Humana sues dozens of generic drug manufacturers for price-fixing scheme

Humana has filed a lawsuit against more than two dozen pharmaceutical companies for conspiring to fix the prices of widely used generic drugs, a scheme that forced the insurer to pay for drugs at artificially inflated prices.

The complaint, filed in the U.S. District Court for the Eastern District of Pennsylvania on Friday, adds to numerous ongoing investigations by the Department of Justice and nearly every state in the country. Humana said its allegations are "based on personal knowledge" of the price-fixing scheme as well as information made public during the state and federal investigations.

Communications between the drug manufacturers reveal that the companies schemed to obstruct competition and set, increase, or maintain the drugs’ prices, according to the 273-page complaint (PDF). It also alleges that the defendants made arrangements not to compete against each other. 

The communications allegedly took place at trade association meetings and conferences, at dinners and other private outings, and via phone and text message. The lawsuit names nearly 30 manufacturers including Mylan, Novartis and Teva, nearly all of which have been subpoenaed by federal prosecutors. Heritage Pharma's former CEO and president already cut a deal with state prosecutors last year and agreed to assist with the investigation.

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Humana said it wants to "recover damages it incurred from egregious overcharges it paid for certain widely-used generic drugs, arising from a far-reaching conspiracy among Defendants and others to blatantly fix the price of such drugs." The insurer has requested a jury trial and is seeking treble damages under the Clayton Antitrust Act.

Humana’s complaint includes a list of 16 specific generic drugs it purchased in “substantial quantities” for “grossly inflated prices” due to the conspiracy. Five of the drugs are used to treat cardiac conditions, including hypertension and high cholesterol; however, taken together, the 16 drugs treat a wide range of medical issues, from depression to arthritis to multiple sclerosis.

“For most patients prescribed one of the Subject Drugs, the drug is a necessity that must be purchased regardless of price,” Humana said.

Humana claims it spent more than $1.7 billion on the drugs listed in the complaint.

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The insurer said there are also "various other persons, firms, entities, and corporations" presently unknown to the company that acted as willing co-conspirators in the scheme.

While Humana points out that the use of generic drugs saved the U.S. healthcare system $1.68 trillion between 2005 and 2014, the defendants’ collusion forced Humana to pay “artificially inflated prices at supracompetitive rates.” According to federal data, the prices of these drugs shot up as much as 8,000% over the course of years, months, or even weeks.

In November, 47 attorneys general representing 45 states, the District of Columbia, and Puerto Rico, and the Department of Justice filed suit against 18 pharmaceutical companies and two of those companies’ chief executives for conspiring to fix generic drug prices as well. Humana references the suit extensively in its own complaint. 

One particular line of Humana’s complaint strikes at the heart of the drug pricing debate that has raged for decades.

“The United States is a venue ripe for illegal anticompetitive exploitation of prescription drug prices due to laws that regulate how prescription drugs are prescribed and how the prescriptions can be filled,” it said.