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Biopharmaceutical Company Wins Summary Judgment On State AG Price-Fixing Claims
07/07/2026On June 23, 2026, the U.S. District Court for the District of Connecticut granted a large pharmaceutical company’s (“Company”) motion for summary judgment in a sprawling antitrust action brought by state antitrust enforcers against pharmaceutical drug manufacturers. The State of Connecticut v. Sandoz, Inc., et al., No. 3:20-cv-00802 (D. Conn. June 23, 2026). The attorneys general of nearly every state and territory allege that 36 pharmaceutical companies and executives conspired to fix prices, allocate markets, and rig bids for dozens of generic drugs in violation of Section 1 of the Sherman Act. The Company contended that plaintiffs could not show that it joined any conspiracy or that it was liable for the conduct of its former subsidiary (“Subsidiary”). The Court agreed and dismissed all claims against the Company with prejudice.
Plaintiffs accuse defendants of a series of conspiracies to fix prices, allocate markets, and rig bids for 80 generics relating to six branded drug products (Eplerenone tablets, Latanoprost drops, and four formulations of Clindamycin phosphate), including the Company and its Subsidiary. Plaintiffs further alleged that the Company was liable for an overarching conspiracy among all corporate defendants covering every drug at issue.
The Company manufactures and sells branded drugs under New Drug Applications approved by the Food and Drug Administration. An NDA holder enjoys the exclusive right to sell its branded product. When a drug patent expires, the FDA grants the first Abbreviated New Drug Application applicant a 180-day exclusivity window in which to sell a generic version of the branded drug. That window, however, is not entirely exclusive: an NDA holder may authorize a second company to market a non-branded version of its drug, known as an “authorized generic.” The 180-day “exclusivity” period therefore features two potential generics competitors: the ANDA holder and the authorized generic seller.
The Subsidiary specialized in selling authorized generics of the Company’s drugs. Under a series of distribution agreements, the Company manufactured—and the Subsidiary sold—non-branded versions of the six drugs plaintiffs alleged were subject to the conspiracies. Those agreements expressly provided that neither party was the agent or representative of the other. Yet the Subsidiary allegedly appeared to act in the Company’s interest: it allegedly would wait to sell a generic until a competitor obtained an ANDA and began marketing its own generic version of the same drug, thereby providing some price protection for the Company’s branded products.
The Subsidiary allegedly sold authorized generics to contracted customers at a negotiated contract price and to others at a higher, publicly reported Wholesale Acquisition Cost price. The alleged price-fixing conspiracy centered on WAC increases that the Subsidiary implemented after its competitors raised their own prices. For one drug, however, plaintiffs alleged that the Subsidiary and its competitors carried out parallel increases in non-WAC contract prices. Central to plaintiffs’ case, a former Subsidiary executive testified that she told a Company executive she had observed exchanges of competitively sensitive information between Subsidiary employees and their competitors.
Plaintiffs brought a single combined count against the Company and the Subsidiary, asserting that the two were merely alter egos of a single entity and not distinguishing between their conduct. Before the case was remanded to the District of Connecticut, the MDL court to which it was initially transferred had already rejected that “alter ego” theory, finding that plaintiffs failed to allege a sufficient basis for treating the entities as one and the same.
Plaintiffs then proceeded on two alleged theories: (i) the Company directly participated in the conspiracy by exercising significant control over the alleged anticompetitive conduct; and (ii) the Company was liable for its former subsidiary’s conduct under an agency theory.
The court first held that no reasonable jury could credit the direct-participation theory. The Company’s provision of certain “shared services”—office space, human resources, IT systems, legal support, and company email addresses—did not show that the Company participated in the subsidiary’s conduct, because those services were unrelated to the alleged conspiracies. The court likewise rejected the argument that the Company participated by approving the Subsidiary’s allegedly collusive WAC increases, finding no evidence from which a jury could conclude that the Company knew of the Subsidiary’s alleged collusion when it approved the proposed price changes. Mere control over price, the court reasoned, could not establish direct liability absent evidence that the Company itself joined the alleged collusion. Plaintiffs pointed to the Subsidiary executive’s testimony that she reported collusive activity to the Company, but she never testified that the reported activity involved the six drugs at issue. Moreover, the Subsidiary executive’s alleged report predated the conduct concerning those drugs.
On the agency theory, the court similarly found that plaintiffs failed to show any of the three elements of an agency relationship: (i) the principal’s manifestation that the agent will act for it; (ii) the agent’s acceptance of the undertaking; and (iii) an understanding between the parties that the principal will control the undertaking. Plaintiffs argued that the Subsidiary acted for the Company’s benefit by allowing it to recover profits that otherwise would have gone solely to the ANDA holder. But the court found it significant that the Subsidiary kept selling generics past the 180-day ANDA exclusivity window, when other competitors could enter the fray. At that point, the court reasoned, the Subsidiary was simply one competitor among many.
The court also found that the record did not demonstrate that the Company directed the Subsidiary, including in its day-to-day business. Plaintiffs argued that the Company demonstrated control through its approval of the Subsidiary’s WAC prices and the timing of the authorized generics’ entrance into the market. The court, however, concluded that a company’s approval of a subsidiary’s major decisions, without more, did not confer the degree of control necessary to impute liability for the subsidiary’s conduct. Moreover, plaintiffs’ price-fixing claims for one drug involved the subsidiary’s non-WAC contract prices, which the Company never approved.
Having found that no fact finder could conclude that the Company either participated in the alleged conspiracy itself or stood in an agency relationship with the Subsidiary, the court granted summary judgment in the Company’s favor.
Antitrust Litigation