Investigation of generic ‘cartel’ expands to 300 drugs

According to The Washington Post newspaper, December 9, executives at more than a dozen generic-drug companies has a form of shorthand to describe how they conducted business, insider lingo worked out over steak dinner, cocktail receptions and rounds of golf.

The “sandbox,” according to investigators, was the market for generic prescription drugs, where everyone was expected to play nice.

“Fair share” described dividing up the sales pie to ensure that each company reaped continued profits.  “Trashing the market” was used when a competitor ignored these unwritten rule and sold drugs for less than agreed-upon prices.

The terminology reflected more than just the clubbiness of a powerful industry, according to authorities and several lawsuits.  Officials from multiple states say these practices were central to illegal price-fixing schemes of massive proportion.  

The lawsuit and related cases picked up last month when a federal judge ruled that more than 1 million emails, cellphone texts and other documents cited as evidence could be shared among all plaintiffs.

What started as an antitrust lawsuit brought by states over just two drugs in 2016 has exploded into an investigation of alleged price-fixing involving at least 16 companies and 300 drugs, Joseph Nielsen, an assistant attorney general and antitrust investigator in Connecticut who has been a leading force in the probe, said in an interview.  His comments in an interview with The Washington Post represent the first public disclosure of the dramatically expanded scale of the investigation.  

The alleged victims were American health-care consumers and taxpayers, who foot the bills for the overcharges on common antibiotics, blood-pressure medications, arthritis treatments, anxiety pills and more, authorities say.  The cost flowed throughout the system, hitting pharmacists, hospitals and health insurance companies.  

In just one instance of extraordinary cost spikes, the price of a decades-old drug to ease asthma symptoms, albuterol, sold by general manufacturers Mylan and Sun, jumped more than 3,400 percent, from 13 cents a tablet to more than $4.70.  The example is documented in a lawsuit brought against the generic industry by grocery chains including Kroger. 1

Generics account for 90 percent of the prescriptions written in the United States but just 23 percent of costs, according to the industry trade group, the Association for Accessible Medicines.

“There’s old, old drugs that have been around a long time, and all of a sudden their price has increased by hundreds of percent and we don’t know why,” said J. D. Fain, owner of Pieratt’s Pharmacy in Giddings, Texas, a small town east of Austin.

“It makes me angry,” said Eric Belldina, an operator of pharmacies in Masontown and Morgantown in West Virginia.  “Most people think when their prices go up it’s because of raw-ingredient shortage, not thinking the companies are sitting down, saying, ‘Hey, let’s do this.’ “