Generic Drug Price-Fixing Conspiracy Alleged in $2.75B Class Action Lawsuit

A nationwide class action lawsuit has named dozens of the world’s largest generic drug manufacturers, accusing them of a price-fixing scheme to inflate the cost of prescription medications for Canadians.

Lead plaintiff, Kathryn Eaton, wants to represent other Canadian residents across the country who she says were fleeced by the defendant pharmaceutical companies.

“Generic drug purchases in the private sector, which comprise approximately 55 percent of generic drug sales in Canada, are paid for out-of-pocket by individuals, or by businesses and individuals through private drug plans,” points out the class action lawsuit. Generic drugs are not subject to government rate-setting, as opposed to brand-name drug prices that are set and regulated by the Patented Medicine Prices Review Board.

Eaton claims that under this lack of regulatory oversight, generic drug makers were able to artificially control the supply and drive up prices paid by private citizens. The lawsuit alleges an agreement between the pharmaceutical giants to stick to their “fair share” of the market for generic drugs. Dozens of pharmaceutical companies allegedly agreed on whether to sell a generic drug or not and whether to fix or maintain prices on those drugs.

“The conspiracy ensures that the defendants do not compete for market share or on price, thus protecting the defendants’ profits and harming competition,” says Eaton.

Ultimately, the alleged generic drug price-fixing conspiracy enriched the defendant pharmaceutical companies – at the cost of Canadian consumers who paid 30 per cent more for generic drugs than those in other countries.

The class action lawsuit points out that U.S. regulators slapped several pharmaceutical companies with criminal fines after an investigation into price-fixing allegations. Even after several companies faced criminal penalties, investigations are still allegedly ongoing.

“To date, the investigations have revealed an industry-wide conspiracy among the defendant generic drug manufacturers that covers the entire generic drug market,” contends the class action lawsuit. “The conspiracy involves steak dinners, cocktails, rounds of golf, meetings the defendants termed ‘girls’ nights out’ or ‘Women in the Industry,’ and other meetings and communications among the defendants’ executives.”

The proposed class action lawsuit is seeking compensation for all Canadians who paid inflated prices for generic drugs, which is estimated at $2.75 billion, as well as a restoration of lawful competition in the healthcare system.

What do you think of the generic drug price-fixing claims? Do you believe you overpaid for generic drugs? Tell us your thoughts in the comment section below.

The lead plaintiff and proposed Class Members are represented by James C. Orr and Kyle R. Taylor of Affleck Greene McMurtry LLP.

The Generic Drug Price-Fixing Class Action Lawsuit is Eaton v. Teva Canada Limited, et al., Case No. T-607-20, in Toronto Federal Court.

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