generic drug

Many generic drugs cost $20 or less, but prices on other life-saving ones have skyrocketed in the last two years requiring people to pay hundreds of dollars out of pocket, even with insurance. While a 5,000 percent increase may have been an anomaly, the number of significant generic drug increases in recent years has the government conducting a probe into company price-fixing and some drug execs copping guilty pleas.

The first criminal charges were filed after the sweeping two-year U.S. Department of Justice investigation into the generic-drug marketplace. Charges against other drug makers, who are probably nervously watching these legal proceedings, are expected.

The lawsuit maintains that generic drug makers set agreements on respective market share with other companies. This helped them avoid competing on price in the generic market, which makes up more than 80 percent of U.S. prescription drugs.

The First of Many?

Two executives from Heritage Pharmaceuticals have announced they plan to plead guilty on Jan. 9 to charges of fixing prices on a generic antibiotic and a diabetes-treatment drug. Reportedly the two executives, Jeffrey Glazer and Jason Malek, conspired with others involved in production and sale of the medications from spring 2013 through 2015.

“Millions of Americans rely on prescription medications to treat acute and chronic health conditions,” noted a statement by Deputy Assistant Attorney General Brent Snyder of from the Justice Department’s antitrust division. The charges were an initial step to force generic medication manufacturers to compete and provide their products at prices set in the marketplace, not by complicity.

The investigation involves multiple companies. Heritage Pharmaceuticals, however, is just one company making some of the over 20 generic drugs under investigation. Mylan and Valeant Pharmaceuticals both appeared before Congress to explain their recent drice increases. Mayne Pharma Group and Endo International acknowledged being subpoenaed in the Justice Department probe. So have Impax Laboratories, Covis Pharma Holidays and Taro Pharmaceuticals. Many other companies are believed to be involved too.

Additional Government Action

The litigation forms part of a broader generic drug-pricing probe underway in the United States. Recently, 20 states filed civil lawsuits against six companies for conspiring to artificially inflate prices on certain generic medications. The companies include industry leaders Teva Pharmaceuticals and Mylan, as well as Citron Pharma, Mayne Pharma, Heritage, and Aurobindo Pharma.

The 20 states reported that there is evidence of a series of price-fixing schemes in recent years. “These agreements had the effect of artificially maintaining high prices for a large number of generic drugs and creating an appearance of competition when in fact none existed,” according to the lawsuit.

In the interim, the accusations and ongoing investigations at both the federal and statel levels is creating uncertainty in the industry. Mylan and other companies have received a barrage of criticism over exorbitant increases and high prices on generic drugs that used to be inexpensive. With insured people paying hundreds of dollars for generic drugs, the guilty pleas and fallout from the price-fixing probe is likely to result in more lawsuits against these and other firms.

Written and Edited by Dyanne Weiss

U.S. Department of Justice: Former Top Generic Pharmaceutical Executives Charged with Price-Fixing, Bid-Rigging and Customer Allocation Conspiracies
New York Times: 20 States Accuse Generic Drug Companies of Price Fixing
Bloomberg: U.S. Generic Drug Probe Seen Expanding After Guilty Pleas

Photo courtesy of Ragesoss – Creative Commons license