Generic drug makers accused of widespread price-fixing conspiracy

Florida, New York and 18 other states filed a lawsuit alleging a widespread conspiracy and accusing half a dozen generic drug makers of inflating and manipulating prices in a $75 billion industry, officials said Thursday.

“Generic medicine is an important option for consumers in need of medical care and any effort to distort the price of these drugs harms consumers,” Florida Attorney General Pam Bondi said in a statement. “Today’s multistate action seeks to hold these drug companies accountable and protect the market place.”

New York Attorney General Eric Schneiderman said “companies that collude and fix prices for generic drugs in order to pad their profits must be held accountable for the very real harm they inflict.” Such practices make it harder for consumers to pay for “life-saving medications,” he said.

prescription drugsThe suit names Heritage Pharmaceuticals Inc., Aurobindo Pharma USA Inc., Citron Pharma LLC, Mayne Pharma (USA) Inc., Mylan Pharmaceuticals Inc. and Teva Pharmaceuticals USA.

“We have not found evidence that would give rise to any civil or criminal liability,” said Teva spokeswoman Denise Bradley.

“To date,  we know of no evidence that Mylan participated in price fixing,” said Mylan spokeswoman Nina Devlin.

Attempts to seek comment from other firms were not immediately successful.

Officials said the states’ lawsuit accuses the companies of entering into numerous illegal conspiracies in order to unreasonably restrain trade, artificially inflate and manipulate prices and reduce competition in the United States. Drugs involved include doxycycline hyclate delayed release, an antibiotic used to treat conditions including respiratory tract infections, and glyburide, an oral diabetes medication

The states’ complaint alleges that the defendants routinely coordinated the schemes through direct interaction with competitors at industry trade shows, customer conferences and other events — even “girls nights out”  — as well as through direct email, phone and text message.

One day, for instance, 13 CEOs and other executives from generic drug makers met at a steakhouse in Bridgewater, N.J., the complaint said. Jokes from that dinner are blacked out in a public version of the complaint.

Meanwhile, the prices for a large number of generic drugs had begun skyrocketing by 2014, the complaint said. Prices for some generics spiked as much as 600 percent to 2,000 percent, a pharmacist group reported. More than $500 million of Medicaid drug reimbursement during the twelve months ending on June 30, 2014 was for generic drugs whose prices had increased by more than 100 percent, the complaint said.

A day earlier, federal officials said they charged Jeffrey Glazer a former chief executive officer at Heritage Pharmaceuticals Inc., and ex-president Jason Malek in Philadelphia with conspiring to fix prices for those drugs.

Attorneys for those defendants declined comment or did not respond.

In a statement Wednesday, Heritage said, “In August 2016, following an internal investigation that revealed a variety of serious misconduct by the individuals charged today, Heritage Pharmaceuticals terminated them.  We are fully cooperating with all aspects of the Department of Justice’s continuing investigation.  Recently Heritage initiated its own legal action against these same individuals to seek redress for an elaborate embezzlement and self-dealing scheme.  We are deeply disappointed by the misconduct and are committed to ensuring it does not happen again.”

 

 

 

 

Why drugs cost so much: Price fixing charges rock generic world

Troubling allegations revealed Wednesday in a federal case flout “decency,” as one official put it, and may make consumers around the country wonder if they are paying too much for generic drugs that are supposed to provide low-cost versions of medicines including antibiotics and diabetes treatment.

A two-year investigation has resulted in the first criminal charges from the Justice Department, which accused two executives of colluding to fix prices.

rx-drugsJeffrey Glazer a former chief executive officer at Heritage Pharmaceuticals Inc., and ex-president Jason Malek were charged in Philadelphia with conspiring to fix prices for an antibiotic, doxycycline hyclate, and a diabetes drug, glyburide.

“Millions of Americans rely on prescription medications to treat acute and chronic health conditions,” Deputy Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division said in a statement. “By entering into unlawful agreements to fix prices and allocate customers, these two executives sought to enrich themselves at the expense of sick and vulnerable individuals who rely upon access to generic pharmaceuticals as a more affordable alternative to brand-name medicines.”

Attempts to reach defendants for comment through attorneys were not immediately successful.

In a statement, Heritage said, “In August 2016, following an internal investigation that revealed a variety of serious misconduct by the individuals charged today, Heritage Pharmaceuticals terminated them.  We are fully cooperating with all aspects of the Department of Justice’s continuing investigation.  Recently Heritage initiated its own legal action against these same individuals to seek redress for an elaborate embezzlement and self-dealing scheme.  We are deeply disappointed by the misconduct and are committed to ensuring it does not happen again.”

Anyone with information on price fixing or other anti-competitive conduct related to the generic drug industry can contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, officials said.

“Conspiring to fix prices on widely-used generic medications skews the market, flouts common decency – and very clearly breaks the law,” said Special Agent in Charge Michael Harpster of the FBI’s Philadelphia Division.  “It’s a sad state of affairs when these pharmaceutical executives are determined to further pad their profits on the backs of people whose health depends on the company’s drugs.”