Amid significant twists and turns, an investigation regarding generic drug
prices took an unexpected turn in early December as six pharmaceutical
companies were accused by state attorneys general of price fixing schemes.
Because a staggering 80 percent or more of all prescriptions
are generic drugs, the issue is extremely grave. Generic drug companies originally
sought to save consumers money on their prescriptions, however it now
appears the generic drug businesses may have some serious corruption issues
which are actually costing consumers.
Were Prices Artificially Inflated on Diabetes Drug Glyburide and the Antibiotic
Teva Pharmaceuticals, Mylan, and four smaller companies are those currently
under investigation, although more companies could be implicated. Twenty
states have, in a civil complaint, accused these drug companies of conspiring
to artificially inflate prices on a diabetes drug, as well as on an extended-release
antibiotic drug. The Connecticut attorney general, George C. Jepsen, commented
that the information uncovered up to this point is just “the tip of the iceberg.” Jepsen stressed the investigation was ongoing and that he believes
the issue goes far beyond these two drugs and the six companies.
In fact, this investigation has resulted in a cloud of uncertainty over
the entire industry, with several large generic drug companies receiving
subpoenas. The complaint filed by the attorneys general claim many of
the social events engaged in by generic drug companies violate antitrust
rules. The goal of a generic drug company is essentially to be the first
to sell a new drug when the patent for the brand drug nears expiration.
In order to do this, they seek out their rivals and propose “back
door” agreements which allow them to avoid price competition and
share the market. The end result of such a system is to artificially set
and maintain high prices for generic drugs, creating an appearance of
competition where none actually exists.
Anticompetitive Behaviors Alleged Between Teva, Mylan and Smaller Companies
The largest manufacturer of generic drugs in the world right now is Teva.
Mylan is also a large generic drug manufacturer, perhaps most well-known
right now because of the sharp rise in price for EpiPens—a branded
product with virtually no competition. The charges allege that Teva and
Mylan both engaged in anticompetitive behaviors with smaller companies,
but not specifically with one another. The two drugs currently at issue
are glyburide, a commonly used drug used in the treatment of diabetes,
and doxycycline hyclate, a delayed-release antibiotic. As an example,
the antibiotic doxycycline, which sold for $20 for 500 pills in 2013 now
has an average market price of $1,849.00 less than a year later.
Heritage Pharmaceuticals Blames Violations on Fired Executives
Heritage Pharmaceuticals, a much smaller company than Teva or Mylan, has
also been accused of price-fixing for the same two drugs. In fact, Heritage
was identified as the “principal architect and ringleader” of the activities surrounding these two drugs. Two former executives
for Heritage have been accused of making unlawful deals regarding pricing
prior to entering the Glyburide and Doxycycline markets. Heritage is actually
suing these executives, claiming they “looted” millions of
dollars from the company, and were responsible for any wrongdoing the
company is being accused of. Citron Pharma, Mayne Pharma and Aurobindo
Pharma have also been named in the current lawsuit.
How Does Price-Fixing Work?
To better understand the misbehaviors being alleged, the complaint states
that in 2013 Heritage contacted Mylan—the only two makers of the
delayed release antibiotic at the time—stating they planned to release
their own version. Mylan allegedly agreed to walk away from one large
pharmacy chain and one large wholesaler so that Heritage could get a leg
up in the market for that particular drug. Details were hammered out by
Heritage and Mylan, then later a third competitor wanted to enter the
market, and the same negotiations occurred, allowing the three companies
to decide on their own how prices would be set and how customers would
be allocated. When businesses price fix between them, it takes away the
element of competition, therefore the only losers are the consumers. So
far, Mylan and Teva deny all the charges while Heritage is blaming their
two terminated executives for the violations.
Contact Our National Consumer Protection Lawyers
If you purchased Doxy DR or Glyburide, you may have paid too much. Call
the attorneys at Golomb & Honik, PC to discuss your rights. Call the
national consumer protection lawyers at Golomb & Honik, P.C. today at
1-800-355-3300 or 1-215-985-9177 or fill out our confidential
Contact Form to see what your rights may be.
The national consumer protection lawyers at Golomb & Honik, P.C. have
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Jersey, and throughout the United States.