NJ sues Novartis over alleged generic drug price fixing

The basics:

• New Jersey joins multistate lawsuit accusing Novartis, Sandoz of fixing prices, allocating markets, rigging bids for 31 generics
• Alleged actions inflate costs for consumers, employer plans, public programs including Medicare and Medicaid
• Lawsuit cites federal and state antitrust violations, plus New Jersey Consumer Fraud and Voidable Transactions laws
• Case follows evidence from cooperating witnesses, 20M+ documents, phone records involving over 600 industry individuals

New Jersey is among the dozens of U.S. states and territories suing Novartis. The filing comes over claims the East Hanover-based pharmaceutical company conspired with other drugmakers to artificially drive up generic drug prices nationwide.

The complaint was filed Feb. 2 in U.S. District Court for the District of Connecticut. It accuses former Novartis generic arm Sandoz of working with other pharmas to fix prices, allocate markets and rig bids for 31 different unbranded therapies.

As a result, individual consumers, employer plans and public programs like Medicare/Medicaid paid significantly more than they should have for essential medicines, it states.

The 426-page lawsuit also claims Novartis spun off the Sandoz unit to attempt “to hide the ill-gotten gains” from participating in the “systemic” conspiracy. The complaint states that Novartis allegedly took steps to fraudulently transfer and drain assets from Sandoz ahead of the $11.2 billion October 2023 separation.

The lawsuit claims violations of federal and state antitrust law. It also accuses Novartis of breaking the New Jersey Consumer Fraud Act and New Jersey Uniform Voidable Transactions Act.

A spokesperson for Novartis did not immediately respond to a request for comment on the lawsuit. A media representative for Princeton-headquartered Sandoz also could not be reached.

‘Extremely opaque’

According to acting New Jersey Attorney General Jennifer Davenport, the new complaint relates to earlier lawsuits brought by the multistate coalition against companies that Novartis allegedly conspired with, including Teva Pharmaceuticals and Heritage Pharmaceuticals.

The latest lawsuit ties Novartis and Sandoz into the previous three actions, she said.

The announcement also came the same day the coalition announced a nearly $18 million settlement with drugmakers Bausch and Lannett. The agreement relates to a price-fixing complaint.

Davenport described the evidence authorities used to build its cases. Information came from “cooperating witnesses at the core of different conspiracies, a massive document database of over 20 million documents and a phone records database containing millions of call detail records and contact information for over 600 sales and pricing individuals in the generics industry.”

I’m committed to holding prescription drug companies accountable when their conduct violates the law and increases costs for New Jerseyans.
– Jennifer Davenport, acting New Jersey Attorney General

New Jersey Division of Consumer Affairs acting Director Jeremy Hollander also commented. “Prescription drug pricing is extremely opaque, and Novartis’s conduct is one of the most egregious examples of conspiratorial drug price fixing we have ever seen,” he said. “Generic drugs are intended to save patients money, and these actions did the exact opposite.”

Davenport remarked, “The rising cost of health care continues to be a major driver of our affordability crisis. That’s why I’m committed to holding prescription drug companies accountable when their conduct violates the law and increases costs for New Jerseyans.”

Domestic designs

The lawsuit comes as Novartis expects to spend $23 billion over the next five years to grow its U.S. presence. As part of the plan, the Swiss drugmaker plans to build a flagship manufacturing hub in North Carolina. It will also construct a biomedical research innovation center in California and two radioligand manufacturing facilities in Florida and Texas.

Additionally, Novartis said it will expand an existing RLT site in Millburn, as well as ones in Indianapolis, Ind., and Carlsbad, Calif.

Novartis unveiled its broader investment plans in April 2025. At the tie, the company said the increased capacity would enable production of 100% of its key medicines end-to-end domestically. The milestone will apply across its main therapeutic areas: oncology, immunology, neuroscience, cardiovascular, renal and metabolic.

While Novartis looks to grow its manufacturing, research and technology footprint in the U.S., the company also continues an ongoing restructuring. The plan aims to save at least $1 billion annually.

The cost-cutting campaign has resulted in several waves of layoffs at its 20-plus-year-old East Hanover base.

Novartis is among more than a dozen American drugmakers to reach deals with the White House to lower prescription drug costs in exchange from an exemption from U.S. pharmaceutical tariffs. The list includes several other pharma giants with a New Jersey presence, such as Merck, Bristol Myers Squibb, Sanofi, Novo Nordisk and Johnson & Johnson. These companies have also unveiled billions of dollars aimed at boosting domestic capabilities amid pressure from the Trump administration.