Investigation of generic 'cartel' expands to 300 drugs
By Christopher Rowland
December 9 at 7:33 PM
"Executives at more than a dozen generic-drug companies had a form of shorthand to describe how they conducted business, insider lingo worked out over steak dinners, 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 rules 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 steam 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."
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"Among the 16 companies accused are some of the biggest names in generic manufacturing: Mylan, Teva and Dr. Reddy’s. Mylan denied wrongdoing in an emailed statement. Sun, Teva and Dr. Reddy’s did not respond to requests for comment. In a court filing, Teva said allegations of a price-fixing conspiracy “are entirely conclusory and devoid of any facts.”
But investigators say voluminous documentation they have collected, much of it under seal and not available to the public, shows the industry to be riddled with price-fixing schemes. The plaintiffs now include 47 states. The investigators expect to unveil new details and add more defendants in coming months, which will put more pressure on executives to consider settlements.
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"The states’ lawsuit contains particularly pointed allegations against Mylan and its president, Rajiv Malik, who is personally named as a defendant. Mylan faced public scrutiny in 2016 for raising the price of its EpiPen, to treat allergic reactions, by about 500 percent."
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"While traveling in the United Kingdom in 2013, Malik took a phone call from an executive of a competing firm, Heritage, the states say in their lawsuit. Heritage had won FDA approval to market a version of the antibiotic doxycycline called Doxy DR, which is used to treat acne and a long list of infections.
That would put it in direct competition with Mylan for sales of the drug.
During the transatlantic phone call, Malik and the Heritage executive, Jeff Glazer, agreed to divide up the sandbox, the U.S. market for sales of Doxy DR, according to the lawsuit by states and similar complaints by independent pharmacies and grocery-store chains.
During subsequent conversations, according to the complaints, Mylan agreed not to sell Doxy DR to CVS and the wholesaler McKesson — sales volume worth about 30 percent of the U.S. market for the drug. As part of the alleged deal, Heritage agreed not to set a low price.
Without a reduction in price, U.S. consumers ended up the biggest losers in the deal."
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"A drug to treat bone issues related to cancer, zoledronic acid, was the subject of another alleged price-fixing scheme, this time between Heritage and Dr. Reddy’s. Heritage became the first generic manufacturer of the drug in the spring of 2013, but Dr. Reddy’s was close behind. Executives at the companies cut deals so each got a “fair share” of the market, while also conspiring to fix an inflated price, the complaints said.
Dr. Reddy’s, which did not respond to requests for comment, wound up with about 60 percent of the market and Heritage claimed 40 percent, according to the states’ lawsuit."
"Investigators cited evidence that executives knew they were acting illegally. As the discussions with Dr. Reddy’s took place, according to the complaints, a Heritage executive “sent a text message to his entire sales team reminding them not to put their pricing discussions with competitors in writing.”
Mysterious price spikes continue to roil pharmacies and patient groups occasionally, though widespread price collusion was curtailed after authorities issued subpoenas in recent years, said Michael Cole, a Connecticut assistant attorney general actively involved in the case. But many drugs remain at artificially inflated prices."
https://www.washingtonpost.com/business/economy/investigation-of-generic-cartel-expands-to-300-drugs/2018/12/09/fb900e80-f708-11e8-863c-9e2f864d47e7_story.html?utm_term=.75ec4224f2ba
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