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Conn. Leads 20-State Antitrust Lawsuit Against Heritage Pharmaceuticals

Jacquelyn Martin
Connecticut Attorney General George Jepsen speaks at the Justice Department in Washington in 2013.

Connecticut, New York and 18 other states have sued six generic drug companies for price fixing and bid rigging. This week, the U.S. Department of Justice charged two former executives with related felonies.

The lawsuit alleges the companies organized golf outings, girls nights out, lunches, and dinners, all in an effort to coordinate how much they should sell medicine for. If they all set the same price and agreed not to steal each other's customers, they wouldn't have to compete, and sick people will have to pay more money.

This first lawsuit is focused on two generic drugs, glyburide, which treats type 2 diabetes, and doxycycline used to treat acne. Both prices spiked sharply since 2013. Doxycycline went from $20 a bottle to nearly $2,000.

Connecticut Attorney General George Jepsen lead the lawsuit on behalf of states. He is seeking to halt the anti-competitive practices and collect money for customers.

"This is only the first of several legal actions. It's impossible to calculate the full scope of the damages, but it will be very substantial," Jepsen said.

Last month, the lead company in the scheme, Heritage Pharmaceuticals, fired two executives and then sued them. The suit alleges the executives looted millions of dollars, set up phony offices and used private email services to hide their tracks.