A PYMNTS Company

Price-Fixing, Fraud and Collusion, CT Attorney General Offers Sobering View of Generic Drug Market

 |  November 6, 2019

By Colin Poitras, Yale School of Public Health

Connecticut Attorney General William Tong gave faculty and students a rare glimpse into the highly profitable prescription drug market when he shared his findings of a multi-year investigation into the generic drug industry during a presentation at the Yale School of Public Health.

As part of a Dean’s Lecture and the Yale School of Medicine’s Health and Policy Management Seminar on November 1, Tong described an elaborate network of alleged price-fixing and market share collusion between some of the nation’s leading generic drug manufactures. The allegations form the basis of two national antitrust lawsuits filed by his office and supported by a coalition of attorneys general in 49 states.

Connecticut began investigating generic drug pricing in 2014 after prices soared for common generic medications, in some cases by as much as 1,000 percent. Investigators gathered almost 19 million internal documents from major generic drug companies in response to multiple subpoenas, including detailed phone records, emails and text messages. 

The contents were shocking, Tong said. Calls between executives of different generic drug companies appeared to spike on days drug prices were raised or in the days leading up to a major price increase. Even more remarkably, Tong said, investigators found a detailed spreadsheet created by one employee that appeared to contain information related to price-fixing and dividing up market shares. It was the proverbial smoking gun.

“What we uncovered was a multi-billion-dollar fraud and multi-year conspiracy to fix prices and allocate market share for hundreds of generic drugs that we depend on to live every day,” Tong said. “What we discovered is that the generic drug industry, without exaggeration, is the largest corporate cartel in history.”

“And we use that language very purposefully,” Tong continued, speaking to a packed crowd in Winslow auditorium. “(These pharmaceutical companies) run a cartel like OPEC does, like the major illicit drug cartels do. They meet. They talk. They divide up their customers. They set prices. And all of that is extraordinary illegal.”

Continue Reading…