Big Pharma Companies Face Price-Fixing Charges in Court

Some of Big Pharma’s major players, including Heritage Pharmaceuticals Inc., are being sued by 20 U.S. states over claims that those firms have colluded to hike generic drug prices. 

Filed in Connecticut court on December 15, the suit alleges that drug firms have knowingly used informal talks to agree on price points and divide up the market. As a result, this move has driven up the costs of some of the most popular drugs on the market. The affected medications include treatments for diabetes and a well known antibiotic called doxycycline hyclate that is often used in acne treatment and malaria prevention.

Connecticut’s Attorney General George C. Jepsen claimed that this lawsuit is “just the tip of the iceberg” and told the Wall Street Journal:

We think we have under investigation—and I assume Justice does as well—many more drugs than in this lawsuit and considerably more generic drug manufacturers than are parties to this suit.

The companies reportedly named in the suit include Mylan, Teva Pharmaceuticals, Citron Pharma, Heritage Pharmaceuticals and Aurobindo Pharmaceuticals. Mayne Pharmaceuticals is also being sued by state prosecutors.

The suit links to an ongoing action against a former CEO of Heritage Pharmaceuticals. Forbes puts the situation in context:

Jeffrey Glazer, the former CEO of Heritage Pharmaceuticals, is expected to plead guilty in January to helping orchestrate a scheme to manipulate the prices of two drugs, doxycycline hyclate delayed release used to treat severe acne, and glyburide, an oral diabetes medication. It became clear on Tuesday Glazer is cooperating with federal prosecutors and the allegations state attorneys general announced on Thursday mirror the criminal allegations, but also name the companies involved and detail some of the conversations Glazer and Jason Malek, the former president of Heritage, had with other drug company executives from companies like Mylan and Teva.

The suit alleges that Heritage, under CEO Glazer, led the charge in price-fixing, using a series of meetings with other executives — as well as exploiting meetings among female pharmaceutical reps — to agree on price terms.

The complaint goes further, however, stating that the companies tried to hide their collusion by deleting emails and other communications from their phones and computers.

As for the antibiotic mentioned above, the suit claims that Heritage and Mylan — the latter of which was the only manufacturer to sell the generic drug at that time — worked together to split the market and avoid competition. This decision ultimately resulted in an increase in doxycycline prices, burdening consumers.

As the New York Times highlights, doxycycline increased in price from $20 per 500 pill-bottle in October of 2013 to $1,849 by April of 2014.

Drug companies have argued that price raises are a result of their need to channel money into innovation. They contend that these price hikes do not impact consumers because insurers bear the brunt of the increase. In cases where individuals lack insurance, the firms claim to run price cut schemes.

However, critics insist that the higher prices do affect consumers because they make health care more expensive.

Readers familiar with the price-fixing issue may remember that Mylan is still reeling from intense criticism it received after significantly increasing the price of its EpiPen. The company also worked to make its product the go-to in many state schools that must carry anaphylaxis prevention treatments.

While this suit is unrelated to that issue, it speaks to wider dissatisfaction over spiraling U.S. drug prices that independent watchdogs, consumer groups and Congress all allege are out of step with global drug markets.

Both Mylan and Tyva have maintained that no evidence of price-fixing exists. At the time of writing, the other companies had not yet issued statements.

This lawsuit comes as the Justice Department pursues several of its own price-fixing investigations. The case certainly raises significant questions about a key concept in American healthcare: Through use of a competitive generics market, consumers are able to access the best prices and health care when they need it.

Even if we accept that competition can be good for consumers, frameworks to prevent price-fixing clearly haven’t worked in this case. The findings highlight the need for further regulation of an industry that — at the moment, at least — appears to be abusing its freedoms.

Photo Credit: Gloval Panorama/Flickr ">nameofphotographer .

54 comments

Sarah H
Sarah Hill7 months ago

I don't think drug companies should be allowed to advertise individual drugs. It's not for us to decide which prescriptions we want it's for the doctor to decide which is best.

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Chun Lai T
Chun Lai T8 months ago

Thank you for sharing

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Marie W
Marie W8 months ago

Thanks for sharing.

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Leong S
Leong S8 months ago

noted.thanks

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Nang Hai C
Nang Hai C8 months ago

noted.

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Jennifer H
Jennifer H9 months ago

Big Pharma == Big Crooks.

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Siyus C
Siyus Copetallus9 months ago

Thank you for sharing.

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Joan E
Joan E9 months ago

Don't go easy on them. Their greed costs lives.

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william M
william Miller9 months ago

thanks

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M Q
M Q9 months ago

Not surprising news. :(

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