We have long suspected that something was rotten within the generic drug industry. Put aside questions about substandard factories in China and India or fraudulent test results. The latest bombshell to hit the generic drug industry involves the charge of price fixing. This could be the biggest generic drug scandal in decades.
Generic Drug Scandal: Skyrocketing Prices!
What has concerned us for the last few years is the escalation in prices on a number of old generic drugs. The free market system is supposed to prevent this sort of thing from happening. Even worse, there have been shortages of critical generic medications. Doctors have had to scramble to find critical medicines that should have been readily available. How could this happen?
We began to wonder whether some generic drug companies had colluded to divide up the marketplace so they could raise prices without fear of competition. Today, there is confirmation that our worries may have been justified. The generic drug scandal has made headlines all across the country.
An announcement by 20 state attorneys general that they would be suing a group of generic drug manufacturers reinforces our worst fears. Companies like Teva Pharmaceuticals USA Inc, Mylan Pharmaceuticals, Aurobindo Pharma USA, Citron Pharma LLC, Mayne Pharma Inc, and Heritage Pharmaceuticals Inc have been accused of conspiring to manipulate prices on the antibiotic doxycycline and the diabetes drug glyburide.
The Tip of the Generic Drug Scandal Iceberg?
This may the the tip of a very big iceberg. That is basically the position of George Jepsen, attorney general for the state of Connecticut where the federal lawsuit was filed. Many more drugs are under investigation and other generic drug manufacturers are under scrutiny. The official complaint by the 20 attorneys general alleges that some of the executives at the named generic drug companies colluded on several occasions. The scuttlebutt on the street suggests that these guys attended “industry dinners” where they traded information on business strategies. The Wall Street Journal states:
“During those sorts of gatherings, attendees would gain access to each other’s business strategies, which ‘often leads to agreements among competitors to allocate a given market so as to avoid competing with one another on price,’ according to the complaint.”
The Journal notes that:
“Female generic pharmaceutical sales representatives, meanwhile, had their own opportunities for collusion, the complaint says. At ‘Girls Night Out’ or ‘Women in the Industry’ meetings and dinners, they would huddle with competitors and ‘discuss competitively sensitive information.'”
The Doxycycline Disaster:
Doxycycline is a tetracycline-type antibiotic. It was approved under the brand name Vibramycin in 1967. It has been a mainstay in the treatment of a wide diversity of infections for decades. It is prescribed for urinary tract infections, upper respiratory tract infections, chlamydia, cholera, Lyme disease and Rocky Mountain Spotted Fever. This drug used to be really affordable. One pill could cost as little as 6 cents. In recent years, this old generic drug jumped to as much as $3.65 per pill. That is a 6,000 percent increase! That, in our opinion, is highway robbery.
According to the Wall Street Journal:
“In the doxycycline hyclate scheme, for example, the complaint alleges that Heritage, which began selling the drug in 2013, conspired with Mylan, which was the only generic manufacturer selling the drug at the time, to divide the market so as to avoid competing with each other on price.
“‘The objective was to avoid a price war which would reduce profitability for both companies,’ the complaint says. In instances when Mylan competed for business, the complaint suggests Heritage contacted Mylan directly to tell it to back off.”
But wait, it gets worse. Brent Snyder is Deputy Assistant Attorney General in the antitrust division of the Justice Department. He was quoted as saying that two generic pharmaceutical executives for Heritage Pharmaceuticals were in deep trouble:
“By entering into unlawful agreements to fix prices and allocate consumers, 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.”
What Do the Generic Drug Companies Say?
As far as we can tell, no company has yet admitted to any wrongdoing.
According to the Washington Post, a spokeswoman for Mylan states that the generic drug company knows “of no evidence that Mylan participated in price fixing.” Another huge generic drug manufacturer, Teva, was quoted as saying that the firm has “not found evidence that would give rise to any civil or criminal liability.”
As we write this, at least a dozen generic drug companies are under scrutiny and two dozen drugs may be involved in the generic drug scandal. This story is not going away any time soon.
Are You Mad as Hell?
Visitors to this website are outraged about generic AND brand name drug prices. Here are just a few comments:
MadAsHell in Central Ohio says:
“I don’t know about price increases for the generic antidepressant, buproprion, but I was shocked to find that the brand, Wellbutrin, costs a shocking $1,017.00 for a 30 day supply.
“I had been on a generic bupropion when it apparently stopped working. My doctor gave me a three-week sample supply of the brand, and it made a remarkable difference. However my drug plan doesn’t cover the brand (and I really don’t blame them). This is, in my opinion, another example of price gouging and manipulation of the market. We need to keep this issue up front in the news and social media. Hopefully, at some point, to lower health care costs, this thievery will be stopped.”
“Write your congressman! Tell him or her you are sick and tired of Big Pharma running over Medicare and the citizenry at large.”
Annette in Portland, Oregon wonders:
“How does a person know if a drug she is taking is produced in a foreign country, is diluted, or even filled with harmful chemicals?”
In theory, Annette, the FDA is supposed to be on the job protecting Americans from substandard generic drugs. Sadly, the agency has disappointed us repeatedly when it comes to monitoring foreign-made generic drugs and notifying the public in a transparent way what it has uncovered.
If you too are “mad as hell” and want to learn more about the generic drug scandal, you will find our Guide to Saving Money on Medicine of great interest. We document the dramatic rise in generic drug prices over the last few years and discuss ways you can protect yourself from the greed that now seems rampant within the pharmaceutical industry.
Share your thoughts on the generic drug scandal below in the comment section.