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 Doxycycline?
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 Legal, PC to discuss your rights. Call the national consumer protection lawyers at Golomb Legaltoday at 1-800-355-3300 or 1-215-985-9177 or fill out our confidential Contact Form to see what your rights may be.
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