The parent company of Cody Labs faces claims from state attorneys general in a price-fixing investigation. Cody Labs is for sale after halting construction on a planned new facility at the north end of Cody.(Ruffin Prevost/YellowstoneGate.com)

A coalition of 44 state attorneys general — Wyoming’s not among them — filed suit Friday against 20 pharmaceutical companies including Lannett, Co. the parent company of Cody Labs, accusing them of conspiring to inflate generic drug prices.

Cody Labs is a wholly owned subsidiary of Lannett, which also operates drug manufacturing facilities in Carmel, New York, and Seymour, Indiana. Lannett announced in October a plan to sell its Cody plant, which makes active pharmaceutical ingredients including opioids.

Lannett rose to prominence in Wyoming in 2016 when it was approved for a $23 million low-interest loan from the state for a planned expansion of Cody Labs amid promises of new jobs. The expansion has since been halted and layoffs announced. The company and state never completed the loan negotiation.

The company also has been a part of an ongoing investigation by the U.S. Department of Justice into anti-competitive behavior by generic manufacturers.

The company has stated previously that it has complied with all state and federal laws, and repeated that assertion in its quarterly filing Monday, May 7. Lannett also said an extensive review by outside counsel has found no wrongdoing, and that it continues to cooperate with investigators.

Though Lannett reported generally positive news on its quarterly earnings, investors responded negatively — driving the stock down sharply — in an apparent reaction to the disclosure that the company would face claims and potentially steep fines as part of the multi-state investigation into price fixing.

Court documents unsealed in April offered some insight into how state investigators from Connecticut and several other states will seek to make their case alleging price fixing in generic drug markets. Text messages and other communications entered into evidence show employees from Lannett and other manufacturers communicating with each other in what investigators allege were discussions regarding the timing and other details of drug price increases.

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In a February conference call with investors and financial reporters, Lannett CEO Tim Crew said he expected the company to complete its sale of Cody Labs by the end of June. No details have been released about prospective buyers.

Lannett sought public assistance in 2016 for a low-interest state loan for the construction of a separate new facility at an industrial park in north Cody. But the company never finalized a $23 million loan approved by the State Loan and Investment Board, and halted construction on the new facility midway through the project.

Cody Labs announced last summer a restructuring plan that was expected to result in approximately 50 employees being laid off as Lannett sought to pay down $1 billion in debt resulting from purchasing two competitors.

Ruffin Prevost is the editor of YellowstoneGate.com and covers Wyoming from Cody for Reuters. He worked previously as the Wyoming reporter for the Billings Gazette and as managing editor for WyoFile. Contact...

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  1. Amazing. They buy our politicians to get what they want while harming our state citizens and then go back on their promises of jobs. To the point of losing even more because greed caused them to buy up competition. I’d like to know why the competition sold? Did they use an unsavory, yet legal, tactic? I’d also like to know who took any “gift” from them in our state. Wallets over people everytime. Sad.

    Reply

  2. As a matter of fact , the price fixing done by the Big Pharma makers is Collusion .

    The whole point of generic drugs is to allow competition among manufacturers once the initial patent period expiress and ( theoretically ) the company that developed the drug has earned it’s money back and some profit from it. But where is the competition if the drug execs sit down and between them divide up the market and agree in the prices charged. That is the very definition of Collusion.

    The issue to Wyomingites is the State Attorney General being one of only 5 states not joining 46 other Attorneys General in prosercuting Big Pharma nationwide , thus removing Wyoming from any primary settlement when it comes time to pay out billions in fines and punitive damages. Recall the Big Tobacco lawsuit and reparations. Wyoming was on hind teat for that one, too. never mind there is a parallel lawsuit by nearly the same roster of state Attorneys General prosecuting Big Pharma for the opioid crisis. Where is Wyoming on THAT ? It’s pretty much all by itself out in the weeds, suing Perdue Pharma alone , only after some Wyoming County Attorneys filed suit when the State did not, but then reluctantly joined in . Chances are that Lone Wolf legal strategy abainst Big Pharma will not produce much for Wyoming. Perdue should have no trouble negating Wyoming all by itself when there aren’t 45 other Attorneys General to do battle with . We Be Dumb.

    I think the article here touches on Wyoming’s recalcitrance to sue Big Pharma. because the State of Wyoming has been in bed with Lannett for nearly a decade, lavishing the P{hiladelphia company with millions in loans and grants in the name of ” economic development “. Never mind that Cody Labs retains a hugely precious Opium Importation license granted annually by the FDA and DEA. At one time it was only one of three domestic US drug makers that had an opium license, and Cody Labs produced and unknown but undoubtedly very large quantity of the opioid active ingredient that the bigger companies produced Rx opioid drugs from. Cody Labs did a great deal to enable the destructive opioid crisis ravaging America. And the State of Wyoming was sweet-talked into bankrolling that.

    If only an investigative reporter could get documents revealing just how much morphine sulfate Cody Labs sold to proprietary manufacturers beginning in 2001 using that opium import license. For a few years. Cody Labs actually manufactured hydrocodone, the active ingredient in Oxycodone, and other ingredients. They also have a line of cocaine based products.

    So tell me, former Wyoming Attorney General Peter Michael, current AG bridget Hill , and Governor Gordon What is more important to you? — protecting Cody Labs and Lannett Inc to save face politically , or go to bat for each and every Wyoming citizen who uses a prescriptiond rug of any sorts and is utterly at the mercy of Big Pharma’s callous soullelss price fixing and Collusion ? Will you go on record stating why Wyoming is not part and parcel to the nationwide lawsuits?

    I believe you owe us an honest explanation.

    Reply

    1. Fantastic response. I hope you will post this publicly on social media or to a variety of northern Wyoming newspapers.

      Reply