US: Generic drug price fixing probe widens

According to NPR, 45 states and the Department of Justice (DOJ) are claiming that generic drug prices are being fixed, and the alleged collusion may have cost US business and consumers more than US$1 billion. In their complaint, prosecutors say that when pharmacies asked drug makers for their lowest price, the manufacturers would rig the bidding process.

“The companies would work out in advance who would get the lowest price and then the other competitors may put in what we would call a cover bid,” says Michael Cole, who heads the antitrust department at the Connecticut Attorney General’s office.

You can see where the probe is widening in their complaint where they suggest, but don’t allege, that the price-fixing conspiracy also involved drug distributors. Prosecutors are sending more subpoenas and planning a new complaint.

“It could be more generic manufacturers, it could be more drugs, it could be more entities in the distribution chain. It could be all of that,” Cole, of the Connecticut Attorney General’s office, says.

Prosecutors say health insurance premiums and copays increased because of this price-fixing scheme. They also say tax-funded programs like Medicare and Medicaid overspent on drugs.

So far, two executives from Heritage Pharmaceuticals have pleaded guilty to antitrust crimes. Both are now feeding information to prosecutors who say the two rigged prices on, among other drugs, the common antibiotic doxycycline, which shot the price up 8,000%.

Full Content: NPR

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