The People's Perspective on Medicine

Giant Generic Drug Scandal: Companies Accused of Price Fixing!

It is unseemly to say we told you so, but we have been hinting for quite a while that there was a generic drug scandal brewing. Has there been price fixing?

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.”

Penelope suggests:

“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.

Rate this article
4.7- 35 ratings
About the Author
Joe Graedon is a pharmacologist who has dedicated his career to making drug information understandable to consumers. His best-selling book, The People’s Pharmacy, was published in 1976 and led to a syndicated newspaper column, syndicated public radio show and web site. In 2006, Long Island University awarded him an honorary doctorate as “one of the country's leading drug experts for the consumer.” .
Saving Money on Medicines

This online guide offers 20 pages of information on how to safely buy prescription drugs from Canada, assess generic drugs, qualify for free medicine from drug companies, and more. Updated 10/2016.

Saving Money on Medicines
Join over 150,000 Subscribers at The People's Pharmacy

We're empowering you to make wise decisions about your own health, by providing you with essential health information about both medical and alternative treatment options.

Showing 31 comments
Add your comment

Try Exemestane for breast cancerntreatment of prevention. It is generic for Aromasin (SP)

My insurance just filled a RX for 90 days for my cost of 141.00 last ins company was over 300.00. Walmart says the cash price is 1698.00. I hope the mfg chokes on it.

It seems that the Government should be able to step in and control some of this price fixing. Like Medicare as the disabled and the senior population are suffering probably more than most.

I am a pharmacist and previously was a research chemist in pharmaceutical chemistry. I urge you to work with your pharmacists and physicians on these issues because we want to help. We are frustrated too, because our knowledge is in pharmacology and healthcare not business and economics. I caution the public not to include pharmacists when you use terms like “pharmacy industry.” Many well-trained pharmacists have been educated in dietary supplements as well. ALL substances ingested have pharmacologic effect at a receptor site; every substance you ingest, eat, or drink is broken down chemically. Thus, do not be fooled that a “natural product” will be without side effects, drug interaction, contamination, potentcy, and MOST importantly purity issues. We NEED the FDA to regulate this beast of a health system I work in, so I can give patients good information and not be learning along side them about these issues.

I have been taking Librax for IBS (as needed) for 30 years. I now take the Generic. The last few refills that I have had has done absolutely nothing for pain. The Librax has really worked for all these years. My Insurance plan will only pay for Generic. Now most of my Meds are generic. They just switched my Crestor to generic, only way that they will pay.

I cannot tolerate generic Prozac by the 4 companies I tried. It simply does not work. The price for brand name is $966.85 for 90day supply. The generic cost, even increased is under $50. We need some oversight on these costs.

Not long ago I was paying about $5 or $10 for a 60gm tube of Desonide (used for dermititis). I was shocked when it went from about $10 to over $300 in one year!

This is not a surprise.

I think the escalating costs of drugs is a huge problem in the US. Many people will have to forgo their medications and their health will surely suffer. I do believe the drug companies are gouging the public. On a similar note, I am a practicing veterinarian. We too use Doxycycline and many other of the same drugs used for humans. The increased costs have made many of these drugs too costly and many pets are being euthanized as a result. I could give you dozens of examples. Something has to be done.

The generic drug companies are walking hand and hand with the major drug companies and have been for awhile. Since, when does a brand name become cheaper than a generic drug??? Where is the generic drug for lets say, INSULIN!! The CEO’s/drug companies are interested in BIG PROFITS!! I have not heard of a CEO not taking one or two million dollars from there salary/benefits. Why should they not make 14-20 million a year PLUS BENEFITS(retirement/stock options) They have no moral code or ethics toward there fellow man. Epi. pens/narcan save lives but the price just keeps going up. I guess we should buy stock options on medications that people really need just survive. Well I could not live with myself knowing that someone would have died because of my(their) GREED.
I am sure there is a special place for those people later on after death.

The generic drug replacement for Corgard, a beta blocker, went from $30 a month to over $800 in recent years. I took Corgard for over 20 years but had to give it up because of the cost. I am hoping that this sanctioned robbing of older people will be stopped.

The Doxycycline price gouging several years ago involved the drug manufacturer covering NC claiming to me that there was a problem at the plant that caused them to stop manufacture for at least 6 months, at which time the price of the medication skyrocketed to over $600 per month supply. At the time, I had applied to their low-cost drug program for Doxycycline, but had my check returned with that explanation, which I felt at the time was a big fat lie.

This limiting of Doxy coincides with the time frame that the CDC acknowledged publicly that Lyme Disease [LD] infects at least 10x the number previously cited, increasing the figure to 300,000 people per year. Doxycycline is the primary means of addressing acute LD as well as chronic cases, so a surge in pricing timed to coincide with more awareness of Lyme Disease was intended to bring the drug’s manufacturers massive profits at the expense of millions of people with Lyme Disease each year who depend on Doxycycline.

Many LD sufferers pay out of pocket for medications because insurers have repeatedly denied the research proving that Chronic Lyme Disease exists and requires long-term treatment, and consequently deny patients the long-term antibiotics needed for recovery. This price-gouging strategy by drug manufacturers is a big part of why people with Lyme Disease often lose their cars and homes while trying to pay for treatment. It is criminal and needs to be prosecuted.

Our Pediatrician ordered a topical acne medicine for my daughter with Clindamycin and benzoyl peroxide. They wanted $400 for a 3 month supply! We waited until we had met our deductible and got it for $10. It was a generic, from Mylan, (aren’t they the EpiPen people?).

Can’t understand why generic Clindamycin and an OTC topical acne cream can cost $400. Highway robbery.

wellbutrin is now marketed as an anti smoking”aid”. The drug companies paid tv ads overwhelm one, especially around news times. Sameo sameo, with a corrupt or lazy or inefficient FDA. I don’t expect much better in the next few years with Trump and his friends

Don’t email or write your representatives they can ignore you. The best thing to do is call their local office in your district those people have to talk to you.

There are concerns about the 21st Century Cures Act, that I believe was just passed. Ingredients in these drugs could be even more compromised and testing won’t be as thorough.

The “epipen” situation makes me very sad and angry as I know that an ampule of epinephrine is very inexpensive. I was on allergy shots for many years and needed to have epi on standby when I got my serum. I happened to be an operating room RN and got my epi “free” from spinal nerve block kits that were not needed. I was told the ampules cost about a penny each…this was 11 years ago so I am sure they are charging more today with inflation/gouging.

I am glad I do not need to have it any longer but I know the prices for the pens today are outrageous, unneccessary, and immoral.

I have been taking generic Cetrizine or Zyrtec for 20 years or so. I bought a CVS brand recently and noticed no relieve from symptoms. I was also worried about HCL and memory loss down the road. So, I quit. From all I’ve read, there should be lots of withdrawal symptoms. Guess what? No problems getting off this medication. I then began to think that the CVS brand is bogus. It is probably made overseas and is probably NOT the real generic medication. I’m slowing taking myself non-essential medications because I think that Big Pharma is not policing itself very well.

I posted earlier about the price increase of Wellbutrin. Because the co-pay would be too high ($750), my pharmacist suggested trying another generic. I did, switching from the generic offered by Actavis (owned by Teva) to one made by Par pharmaceuticals. Within 2 days I felt as well as I had on the brand (my doctor had given me three weeks worth of samples.) Frankly I don’t buy the standard explanation that “people may react differently because of the binders used in the generics.” I suspect that the Actavis/Teva offering is either completely empty of the drug, or has so little as to be ineffective. I would be interested if anyone else has had this experience.

Your approach to identifying price gouging by pharmaceuticals is inappropriate. The test of price gouging is the bottom line profitability of the companies producing the medications. If their bottom line profits are excessive you have valid reason for criticizing them. If not, the cost per pill is apparently not appropriate.

If your wording in attacking some of the drug manufacturers is appropriate and their profits are unreasonably high you have just identified the path to great wealth for all of us. Simply invest in the stock of these companies and sit back and be part of the upper 1 percent.

What is your incremental additional cost for each of the DVDs you sell? Compare that to the selling price and then attack the drug manufacturers if you can in good conscience do so.

I am a retired engineer and have zero connection to any pharmaceutical companies. My only interest in this conversation is a concern for unbiased discussion rather than slanted, ill-founded verbage.

No lives are at stake with the CDs we offer. Please note, we have not raised the price for our CDs in many years, and have no plans to do so. Moreover, people who object to the price of the CD can get the exact same information from the mp3, offered for free for the first month after the show airs. Consequently, we don’t believe your analogy is appropriate.

Why address the cost problem when it’s so easy to blame insurance companies and/or the ACA – most people will not think further into the issue

I take T-4 and T-3 for my thyroid disease. My encocrinologist has always said that it’s vital to take the name brand version of levothyroxine– aka “Synthroid”–and NOT a generic. The doctor writes my prescription “NBO” which translates to ‘Name Brand Only’. My insurance refuses to pay for the name brand, Synthroid, even though there seems to be consensus among endocrinologists that there is an important distinction between the name brand drug and the generic.

Coincidentally, I also take for my Hashimoto’s Disease in conjunction with Synthroid, “Cytomel”, which is the brand name drug for liothyronine. However, the doctor approves for me the use of the generic form of Cytomel. It seems that the generic of Cytomel which is liothyronine, is acceptable. But that is not the case with Synthroid and it’s generic version.

As part of the treatment for the Hashimoto’s, I am also on Welbutrin which is the name brand version of bupropion. Over the years, I have tried the various manufacturer’s generic of Welbutrin with little success. If brand name and generic are truly the same drug, what then is the cause for generic versions of some drugs not being as effective? Now THAT is a question that has not been answered to my satisfaction. And I am living proof that differences do exist.

Fortunately, I have had no problems with any price gouging on my medications. That said, the price fixing does not come as a surprise to me as in the open market place as in the political arena, Greed, Graft and Corruption are the norm.

readers comments, please

no doubt that the collusion within Big Pharm is both illegal as well as unethical. As in so many instances in which companies are convicted of price fixing, what bothers me is the companies “agree” to a fine. What I have never seen disclosed is what their profit was while price fixing as compared with the fine? If they made a million dollars profit and were fined $500,000, what then is the incentive to not continue to fix prices or defraud the public?

chlorthalidone 25 mg Tab/Hygroton has been with me for maybe 40 years. Until a couple months ago a 90 day supply was less than $10.00. At that time it jumped to near $80.00 for same rx.I complained to doctor and pharmacy, and they contacted BCBS, and within about 2 months the price went down near where it had been.
Not sure who did what but I’m impressed.

I am outraged that these companies are playing these price games with the most vulnerable of our citizens. I am talking about the elderly, the citizens being charged the most and can afford it the least. Just this month my elderly mother went to the pharmacy to pick up her glaucoma eye drops. She was stunned when told the price was $91.00 because the previous month they were $47.00. I don’t understand a $44.00 increase in one month either. The only explanation I have is because they can. Anyway she told the pharmacist she would have to think about getting her medicine sometime later and as she was leaving without her medicine a dear angel who overheard the conversation paid for her medicine!! I will pay this forward.

Sounds like the worthless FDA should be a prime candidate for ‘consultation’ (keelhawl the top wonks + complete overhaul) by Mr. Trump. This Big Pharma news is absolutely ludicrous. The FDA and Congress…once again…are completely asleep at the wheel and failing to do their jobs to protect us from the greed of the pharmacy industry. Maybe time for Trump, the New Sheriff In Town, to get things straightened out with firings at the FDA.

In the last couple of years the price of a month’s supply of Armour thyroid has gone from about $10.00 to about $36.00. Armour thyroid has been around since the early 1900s and is cheap to make. I couldn’t figure out why the price had risen so much until I started reading about much more serious price hikes, and the type of collusion you are writing about.

My most recent epi-pen cost a fortune, as we all know about now, and that was very disturbing. But the Armour thyroid, while still cheap compared to most drugs, is something that I and many others take every day of our lives, and for it to go up like that seems just one more example of the big picture.

I have been told by my insurer that bupropion is now considered a brand and is priced accordingly. Needless to say, I am weening myself off of this drug and will not take another antidepressant but find something “natural” that will work for me. I stopped my statins and have started taking Red Yeast Rice which is working to lower my cholesterol. I will write my congressperson.

I think it’s best not to take any drugs. It’s getting almost as bad as buying drugs off the street. You are not a patient. You are a profit center.

* Be nice, and don't over share. View comment policy^