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Did Price Fixing by Generic Drug Companies Cheat You?

When you think of price fixing, what comes to mind? Construction, banking, transporation? What about generic drug prices? That scandal has our attention!
Did Price Fixing by Generic Drug Companies Cheat You?
White pills on top of dollar bills bundle. High cost of healthcare concept

Have you ever been cheated? Did someone ever give you the wrong change from a transaction, either knowingly or by accident? What about infidelity? Did someone ever cheat on you? Has price fixing by generic drug companies cost you more at the pharmacy? You might be surprised by the answer.

How Cheaters Get Punished:

No one likes a cheater. If athletes are caught “fixing” a match, they rarely recover their lost reputations.

Think back to Lance Armstrong. He dominated Tour de France cycling for years. After the US Anti-Doping Agency accused him of using performance-enhancing drugs, he was stripped of his titles.

Rosie Ruiz “won” the Boston Marathon in 1980. Her time of 2:31:56 beat the female record for the race. Then she was accused of jumping out of the crowd of spectators about half a mile from the finish line. Unlike most marathoners, she was not sweating or out of breath at the finish line. The Boston Athletic Association soon disqualified Rosie and she was stripped of her victory.

Umpires Also Suffer When They Cheat:

NBA referee Tim Donaghy bet on games he officiated. The FBI investigated him for making calls that could have affected the final score. He pleaded guilty and was sentenced to 15 months in prison.

Athletes (or umpires) who cheat often have to live with their transgressions for the rest of their lives. We wish the same scorn were applied to generic drug companies if they manipulated drug prices.

Price Fixing by Generic Drug Companies:

Most people follow Ronald Reagan’s admonition to “Trust but verify.” When they cash a check at the bank, they count the money before leaving the teller’s window. But it is hard to verify that the price you get charged for a generic drug at the pharmacy counter is fair.

The Antitrust Division of the Justice Department has been investigating price collusion for several years. Twenty generic drug makers are reported to have set prices in secret meetings.

Antitrust Lawsuit vs. Price Fixing:

We started wondering about rising generic drug prices several years ago. The free market system is supposed to encourage competition between manufacturers. That, in turn, is supposed to keep costs low. But we were seeing price increases that didn’t make sense.

We suspected that something was rotten, but we couldn’t prove price fixing. In 2016 we wrote about the mess:

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 expected the public to be up in arms. The story almost disappeared without a trace. But the investigation has continued. Here is the latest chapter.

The Saga of the Price Fixing Scandal:

The Attorneys General of a majority of the states have joined in an antitrust lawsuit against major players in the generic drug industry. Here is what they have discovered.

Executives of these companies divvied up the market and agreed on prices. Men met on golf courses or in fancy restaurants. Women got together in “girls’ nights out.” These drug executives agreed to play nice in their pharmaceutical sandbox. Put another way, a lot of firms were getting together to slice up the generic drug pie. That’s not kosher.

After years of investigation, the chickens are coming home to roost. In 2017, two executives of Heritage Pharmaceuticals pleaded guilty to price fixing and turned state’s evidence. Heritage agreed to pay $7 million in penalties and to cooperate with the feds in their ongoing investigation.

A few months ago, a former executive of Sandoz pleaded guilty to:

“a conspiracy to fix prices, rig bids, and allocate customers for generic drugs.”

The head of the Antitrust Division announced:

“With today’s guilty plea, the Antitrust Division continues its prosecution of high-ranking executives who conspired to cheat America’s most vulnerable elderly consumers by raising prices for vital drugs.”

On March 2, 2020, Sandoz agreed to pay $195 million in criminal penalties. Sandoz is one of the largest manufacturers caught in this scandal so far. But it may not be the last.

Pleading Guilty to Price Fixing:

A few weeks ago, the generic manufacturer Apotex agreed to pay $24.1 million for price fixing. The drug in question was a cholesterol-lowering statin medication. Apotex confessed that it had agreements with other companies:

“to increase and maintain the price of pravastatin.”

Apotex has

“…agreed to cooperate fully with the Antitrust Division’s ongoing criminal investigation.”

In accepting the Apotex guilty plea, the U.S. Attorney for the Eastern District of Pennsylvania said:

“Compromising the health and welfare of innocent people by artificially inflating the price of a much needed medication is not only morally wrong, but illegal. Preying on the public in this manner for the sake of financial gain is something that must be rooted out of the pharmaceutical industry. We will continue to hold accountable any company that engages in this type of conduct.”

Some Attorneys General have labeled this generic drug scandal

“the largest cartel case in the history of the United States.”

Another company that has been caught up in the investigation is Teva Pharmaceutical Industries, one of the largest generic drug manufacturers in the world.

The company maintains that it did nothing wrong. The statute of limitations on the original investigation will soon expire. It remains to be seen how this case will play out.

What Drugs Were Implicated?

According to a 60 Minutes interview with Connecticut Attorney General William Tong, hundreds of drugs were involved in the price fixing schemes. They included the crucial antibiotic doxycycline, the heart medication digoxin, the asthma medicine albuterol sulfate and the cholesterol-lowering drug pravastatin.

Other medications that have seen large price increases include divalproex, prednisolone, levothyroxine, glipizide, meclizine and fluocinonide cream. When the entire case is presented, we may eventually learn about the hundreds of drugs that were part of this investigation.

Price Fixing Is NOT the Only Problem:

Many generic pharmaceutical companies have also been tarnished because of concerns about the questionable quality of foreign-made products. As the Antitrust Division at the Department of Justice brings its price fixing investigation to a close, the public may have additional reason to distrust the generic drug industry.

Over the last decade we have seen dozens of companies cited for manufacturing flaws or fraud. You can learn all about them in our free podcast with Katherine Eban about her book, Bottle of Lies, at this link.

Show 1169: What Are the Problems with Generic Drugs?
When investigative journalist Katherine Eban took a close look at medicine manufacturing, she uncovered many frightening problems with generic drugs.

Generic drug companies have falsified quality control documents in an attempt to get around FDA inspectors. Slipshod operations, especially in sterile manufacturing areas, have caused the FDA serious concerns. Some of these companies have received warning letters that have interfered with their drug exports to the U.S.

What Has Happened to FDA Inspections?

The FDA was having a challenging time keeping up with manufacturing problems before COVID-19. Starting in March of 2020, on-site FDA inspections virtually disappeared in foreign countries.

Although the FDA is talking about restarting inspections, concrete plans are not yet in place. In the meantime, there are shortages of crucial medications. The FDA has acknowledged “unprecedented disruptions” in the pharmaceutical supply chain.

Are drugs manufactured in countries that have been hit hard by the coronavirus up to snuff? That’s a great question for which we do not have a great answer. Without FDA inspections, we have no good way of knowing what is going on in manufacturing plants abroad.

How Can You Buy Reliable Generic Drugs?

We are proud to announce a relationship with Valisure, an online pharmacy that:

“chemically tests every batch of every medication and supplement that we sell.”

Valisure will be sponsoring our daily electronic newsletter and the weekly podcast of our radio show for the next few weeks. We have long been advocating for testing of generic drugs by the FDA. Since the agency has not perceived this as important to its mission, we are pleased that one pharmacy agrees with us that testing is an essential first step to ensure drug quality.

When you sign up to get your medicines delivered from Valisure, put PEOPLE into the promo code to get free shipping on your first order. You can call:

833-497-7370

Valisure was the online pharmacy that discovered nitrosamine contamination in the acid-suppressing drug ranitidine (Zantac). Thanks to its testing process, the FDA was alerted to this serious problem with NDMA. As a result, most ranitidine has been pulled from the worldwide marketplace. 

This online pharmacy is at Valisure.com. Again, when you use the promo code PEOPLE at checkout you will get free shipping on your first order.

Share your thoughts on the price fixing generic drug scandal in the comment section below. Have you ever had a problem with a generic drug or have your medicines been working well? Let us know what has worked and what has posed a problem.

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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.” .
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