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.