A lawsuit filed by a group of 44 U.S. states against 20 generic drug makers alleging collusion and price-fixing has revealed how existing market-based, competitive mechanisms fail to protect consumers, according to experts. The complaint, filed in the U.S. District Court in Connecticut, says that drug companies have since 2012 discreetly engaged with each other on price fixing, and that it has escalated into “one of the most egregious and damaging price fixing conspiracies in the history of the U.S.” Teva Pharmaceuticals USA, whose parent company is based in Israel, has been named as the ringleader of the price-fixing.

Other companies named in the complaint include Pfizer, Novartis subsidiary Sandoz, Dutch drug maker Mylan, and India-based firms including Lupin Pharmaceuticals, Aurobindo Pharma, Dr. Reddy’s Laboratories and Wockhardt. Teva’s chief financial officer said at a press conference in Jerusalem that it “has not engaged in any conduct that would lead to civil or criminal liability” and that it plans to fight the lawsuit. The complaint also names 15 individual defendants who are current or former drug company executives.

“What’s particularly discouraging here is we rely on generics to control prices,” said Robert Field, professor of law, and health management and policy at Drexel University, who is also a lecturer in Wharton’s health care management department. He noted that the U.S. is the only developed country that doesn’t have government control on drug prices and instead relies on free market competition. “Now we’re seeing that market isn’t functioning.”

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