Generic Drug Companies Accused of Fixing Drug Prices

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Over a dozen generic-drug companies have allegedly been conspiring to fix drug prices, The Washington Post reported.

Joseph Nielsen, an assistant attorney general and antitrust investigator in Connecticut, told the Post that “This is most likely the largest cartel in the history of the United States,” thanks to the number of companies and the volume of drugs involved.

Officials from multiple states said that executives would meet up at steak dinners, cocktail receptions, and golf, and would use a form of verbal shorthand to discuss business. The “sandbox” was the market for generic drugs; “fair share” was the dividing up of sales to ensure that each company got their profits; when a competitor “trashed the market,” they had sold drugs for less than the agreed-upon prices.

This alleged collusion made a highly competitive industry into one in which coordinated price spikes on identical generic drugs became routine.

Investigators cited a text message sent by a Heritage executive to his sales team, reminding them not to put pricing discussions with competitors in writing, as one piece of evidence of collusion.

Henry Waxman, the Democratic former California congressman who co-wrote the 1984 law establishing the FDA’s rules for generics, told the Post, “It’s particularly ironic since the whole idea of generic drugs was that we would get a lower price. If generic versions are higher than need be through rigged systems, that undercuts the whole idea.”

One drug, Albuterol, which is decades-old and used to ease asthma symptoms, jumped from 13 cents per tablet to more than $4.70, an increase of more than 3,400 percent, according to the Post. Zoledronic acid, which treats cancer-related bone issues, was the subject of another alleged price-fixing scheme.

The victims, according to the Post, are healthcare consumers and taxpayers, who pay for overcharges on antibiotics, blood pressure medications, arthritis treatments, and anxiety pills. The price increases hit hospitals, pharmacists, health insurance companies, uninsured consumers, and insured consumers with high deductibles.

Plaintiffs for the case include 47 states. The defendants, currently, are 16 companies, among which are Mylan, Teva, and Dr. Reddy’s, some of the biggest names in generic manufacturing. Investigators expect to release new details and add more defendants in coming months.

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