A smiley-face text message about hiking the price of an old drug is at the center of a massive lawsuit being brought against nearly 20 big drug companies

Antifungal pills medication

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Price increases on the decades-old antifungal drug nystatin in 2014 are being blamed on collaboration between the companies that made the drug, according to newly revealed allegations in a huge federal lawsuit.

It wasn't a coincidence when several drugmakers all began to increase the price of a decades-old generic drug back in 2014, according to newly revealed allegations in a massive federal lawsuit.

The drug, nystatin, was made by at least three generic drugmakers, all of which had employees in close, cozy contact about the ensuing price hike, according to the complaint. Forms of nystatin are used to treat common fungal infections such as yeast infections and diaper rash.Advertisement

The group of AGs allege that, while on a call about the medicine, one employee working for the New Jersey drugmaker Heritage Pharmaceuticals sent the following text message to an employee of a rival company.

"Work news: we are raising price on Nystatin. Just letting you know. :)," the employee said.

The AGs claim that the competitor, Indian drugmaker Sun Pharmaceuticals, then also started increasing the price of its nystatin.

A Sun representative said that the company believed the allegations were meritless and that it will continue to defend itself "vigorously."

heritage quote 1 (1)

Shayanne Gal / BI Graphics

Attorneys general for 45 states, plus the District of Columbia and Puerto Rico, allege that nearly 20 companies that manufacture generic drugs, including Sun, illegally collaborated with competitors to jack up prices for pharmaceuticals and divvy up markets to limit competition.Advertisement

AGs claim rival drugmakers communicated about how to raise price

Business Insider is the first to report on the unredacted suit, which alleges specific communications between employees of rival drugmakers about how to increase prices.

Read more: A huge lawsuit accuses nearly 20 big drug companies, a billionaire, and 2 brothers-in-law of cozying up to hike drug prices. Here's the inside story.

Other medications outlined in the complaint treat conditions like epilepsy, heart failure, anxiety, insomnia, hypertension, diabetes, asthma, arthritis, and more.Advertisement

The AGs claim that conversations between two nystatin manufacturers, Teva, an Israeli company that is the world's largest generic drugmaker, and Heritage, dated back to mid-2013.

They allege increases had been broached internally at Teva first, but the Teva employee who headed the generics company's pricing team initially opposed them.

And they claim that, after conversations with a high-ranking Heritage leader, the Teva employee later added the drug to a list of "price increase candidates."Advertisement

The complaint alleges that the decision dragged into 2014, when the drug was again on a spreadsheet of price-increase candidates, with the note that the decision had been shared with its two main nystatin rivals.

AGs allege the drug's price doubled to about $100

Teva then doubled the drug's price, to roughly $100, the complaint says.

Teva said in a statement that it denied the allegations and "will continue to vigorously defend itself."Advertisement

In a statement to Business Insider, Heritage said that it fired its former president and CEO in 2016 after an internal investigation revealed "serious misconduct" and has been cooperating with an ongoing federal criminal investigation into suspicions of price-fixing, bid-rigging, and other anticompetitive conduct in the generic-drug industry. The company is also suing the former executives in a separate, ongoing lawsuit, the statement noted.

"We are deeply disappointed by the misconduct and are committed to ensuring it does not happen again," the statement said.Lawyers for the former executives, Jason Malek and Jeffrey Glazer, told Business Insider in a statement that the Heritage lawsuit "is malicious and without merit, and we look forward to demonstrating this in court."Advertisement