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Mylan Exec Targeted by States in Generic Drug Pricing Probe

  • No. 2 at Mylan named in expanding civil case over price-fixing
  • Connecticut AG Jepsen calls drugmaker collusion ‘pervasive’

Mylan NV’s second-ranking executive is the target of a civil investigation by dozens of states conducting a widespread, multiyear probe into alleged price collusion by makers of generic drugs.

State attorneys general said they’re seeking to sue Rajiv Malik, Mylan’s president and executive director, as part of an expanded complaint against pharmaceutical companies from 45 states and the District of Columbia, according to a statement by Connecticut Attorney General George Jepsen. Malik would be the first senior executive from a major drugmaker sued in the case.

Mylan shares fell as much as 8.9 percent in New York, the biggest intraday drop since February 2016.

“These conspiracies were part of a much broader, overarching industry code of conduct that enabled the defendant manufacturers to divvy up the market for specific generic drugs in accordance with an established, agreed-upon understanding for assigning each competitor their share of the market,” Jepsen said in the statement.

Connecticut and other states are asking a federal judge to allow them to add to their existing complaint against six drugmakers. They’re also seeking to add Satish Mehta, chief executive officer of closely held Indian drugmaker Emcure Pharmaceuticals Ltd., to the lawsuit.

Representatives for Mylan and Emcure didn’t immediately respond to requests for comment.

The expanding civil case comes at a time of growing turmoil for the generic drug industry, which has struggled as product prices have fallen and U.S. regulators have promised more competition for some drugs. The civil investigation has run parallel to a criminal probe by the U.S. Justice Department that has so far led to guilty pleas from two former executives of Heritage Pharmaceuticals Inc., a subsidiary of Emcure.

Widening Lawsuit

Led by Jepsen, the civil investigation is naming executives for the first time, as well as expanding the number of drugmakers in the probe to 18 from six, and the number of drugs to 15 from two, according to Jepsen. Previously, it had focused on an antibiotic and an oral diabetes medication, which it said executives had fixed prices on while meeting at trade shows, customer events and dinners.

The drugmakers the states are seeking to add to the lawsuit include Apotex Inc., Dr. Reddy’s Laboratories Ltd., Lannett Co., Glenmark Pharmaceuticals Ltd., Endo International Plc’s Par Pharmaceutical unit, Novartis AG’s Sandoz unit, Sun Pharmaceutical Industries Ltd. and others. Mylan and Teva Pharmaceutical Industries Ltd. were among the drugmakers named in the earlier version of the suit.

“‘We allege in this complaint that the defendant companies’ collusion was so pervasive that it essentially eliminated competition from the market for these 15 drugs in its entirety,” Jepsen said. The result, he said, was higher costs for patients and states.

Malik has worked at Mylan since 2007 and became president in 2012. Previously, he worked at Sandoz and at Ranbaxy Laboratories Ltd. One of Mylan’s senior-most executives, he’s a regular speaker on the company’s quarterly earnings calls. The company’s website describes him as the leader of “all global commercial and operational activities.”

Drug prices have been subject to harsh scrutiny from U.S. lawmakers over the past two years, with executives from Mylan and Valeant Pharmaceuticals International Inc. appearing before congressional committees to explain steep increases.

— With assistance by Erik Larson