Humana Lawsuit Alleges Drug Price Manipulation Against Drug Makers

October 21, 2019 - Humana filed a 600-page lawsuit against 37 pharmaceutical companies over an alleged conspiracy to drive up the cost of generic drugs. Among the defendants are industry giants such as Teva Pharmaceuticals USA Inc.

“[Teva] and its co-conspirators embarked on one of the most egregious and massive price-fixing conspiracies in the history of the United States. They leveraged the culture of cronyism in the generic drug industry to avoid price erosion, increase prices for targeted products and maintain artificially inflated prices across their respective product portfolios without triggering a 'fight to the bottom' among competitors,” the suit reads.

The lawsuit claims that the conspiracy amongst pharmaceutical companies lead to an increase in the price of some generic drugs by over 1,000 percent.

Generic drugs enter the market as a way to promote price competition between pharmaceutical companies. This competition is predicted to help reduce the cost of medications for health insurers and, ultimately, patients.

Humana alleges that the defendants “conspired to manipulate the relevant markets, allocate these markets amongst themselves, and obstruct generic competition in an ongoing scheme to fix, increase, stabilize, and/or maintain the price of [certain drugs]."

Humana furthers that this conspiracy took place through “secret communication and meetings, both at private and public events” among the defendants.

A recent study by the Kaiser Family Foundation found that the rate of drug prices in 2017 rose faster than inflation. Of nearly 3,000 drugs examined in the study, 60 percent of them had list prices that increased several percentage points faster than the rate of inflation.

Some of the highest drug price increases were seen by the pain medication Lyrica by 15.7 percent, the cancer medication Revlimid by 15.3 percent, and the rheumatoid arthritis medication Humira Pen by 13.2 percent. Price increases ranged from three to nine times the rate of inflation for some medications.

While Humana does not comment on pending litigations, the suit claims that the conspiracy resulted in Humana overpaying for many medications for their enrollees, particularly in their Medicare Part D population.

“Humana paid substantially inflated and anticompetitive prices for generic pharmaceutical drugs, and [the] defendants illegally profited as a result,” the claim states.

The claim further maintains that “Humana brings this action 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 suit was filed in United States District Court for the Eastern District of Pennsylvania.

Humana’s claim argues that the conspiracy resulted in increased profits for the pharmaceutical companies at an expense to their organization. Given the large proportion of Medicare beneficiaries covered by Humana, the federal government could also have overpaid for generic medications as a result of the alleged conspiracy.

The claim notes that this has implications not only to Humana but to the United States healthcare system as a whole. Price increases on generic medications entering the market could have the opposite of their intended effect on competition.

“This scheme to fix and maintain prices, allocate markets, and otherwise stifle competition caused, and continues to cause, significant harm to the United States health care system,” the claim alleges.