Antitrust Probe Targets Generic Drug Makers

Charges expected by end of the year

An antitrust investigation by the Justice Department, begun approximately two years ago, has targeted more than a dozen generic pharmaceutical companies and about two dozen drugs, according to a report posted on the BloombergMarkets website. The grand jury probe is looking into possible price-fixing by some executives, and the first charges might be announced by the end of the year.

Industry giants Mylan and Teva Pharmaceutical Industries are among the drug makers who have received subpoenas. Other companies include Actavis (which Teva bought from Allergan in August), Lannett Co., Impax Laboratories, Covis Pharma Holdings Sarl, Sun Pharmaceutical Industries, Mayne Pharma Group Ltd., Endo International’s subsidiary Par Pharmaceutical Holdings, and Taro Pharmaceutical Industries Ltd.

Although it isn’t illegal for companies to raise prices at the same time, it’s against the law for competitors to agree to set prices or to coordinate on discounts, production quotas, or fees that affect prices, according to the Bloomberg article. The federal government can prosecute companies for collusion and can potentially send executives to jail.

Generic drug companies are also involved in a civil price-fixing investigation by Connecticut Attorney General George Jepsen. Jepsen is seeking to lead a group of states to probe the generics industry, which could result in cases seeking damages, Bloomberg says. The first subpoenas in the generics investigation were issued by Connecticut in July 2014.

Generic drugs account for 88% of prescriptions dispensed in the United States, according to data from the Generic Pharmaceutical Association. Generics makers earned approximately $70 billion in U.S. sales in 2015, after discounts and rebates to payers, according to Bloomberg Intelligence.

The federal probe is focusing on the pricing histories of two generic drugs: digoxin, a heart failure treatment, and doxycycline, a widely prescribed antibiotic. Both are produced by several companies.

Medicaid spent 121% more on doxycycline from July 2013 to June 2014 compared with a year before, despite 38% fewer prescriptions, according to an analysis by the Congressional Research Service. Medicaid also spent 90% more on digoxin from 2013 to 2014 compared with the previous year, despite a 16% decrease in prescriptions.

Source: BloombergMarkets; November 3, 2016.