Six Generic Drug Makers Caught In Price-Fixing Conspiracy

Last Thursday, attorneys general in 20 states sued six generic drug makers for conspiring to increase prices on generic medications to boost profits.

The companies named in the lawsuit are Heritage Pharmaceuticals Inc., Aurobindo Pharma USA Inc., Citron Pharma LLC, Mayne Pharma Inc., Mylan Pharmaceuticals Inc., and Teva Pharmaceuticals USA Inc.

The companies allegedly conspired to distort prices for doxycycline hyclate delayed release, an antibiotic, and glyburide, a diabetes medicine, through a series of “industry dinners.” Pharmaceutical executives agreed to avoid competing with one another as it would reduce their profits. Communications pertaining to those agreements were later destroyed.

As the old joke goes, you can’t put two businessmen in the same industry in a room without a price-fixing conspiracy developing.

Connecticut Attorney General George Jepsen told Bloomberg News the investigations were instigated by suspiciously high prices. Generics, being off-patent drugs, are supposed to be relatively cheap as the cost of production involves no intellectual property fees. Instead, prices for doxycycline hyclate delayed release and glyburide were high.

The price-fixing lawsuits come on the heels of criminal charges filed last Wednesday by the Justice Department against Jeffrey Glazer, former CEO of Heritage Pharmaceuticals, and Jason Malek, a former president, in what The Consumerist reports is the first time the Justice Department’s Antitrust Division has prosecuted a case involving generic medications.

Glazer and Malek appear to be cooperating with DOJ, which would mean they are likely to offer up their co-conspirators for a reduced sentence and fines.

According to the Food and Drug Administration (FDA), roughly 80% of prescriptions filled in the US are for generic drugs. If price-fixing goes unpunished, the consequences could affect millions of Americans.