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Lawsuits Raise Specific Concerns About Generic Prices

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I am thankful that some antibiotics and antivirals that I take daily are dirt cheap as generics. But for more specialized conditions is that big cost savings always the case? And is there “collusion” among manufacturers to gouge the public? Obviously, there are ethical people and some who are not in any industry and among generic makers it appears this is just as true. Another dark side of prescription medicines.

Generic drugs now account for nearly 90 percent of prescription drug use in the U.S. That’s good news, right? After brand name pharmaceutical developers recoup their research and development costs and earn a profit, the drugs are gifted to us in the form of generic drugs with lower price tags.

But is this always true and handled in an ethical, legal way?

On February 23, The New York Times reported “Patients Eagerly Awaited a Generic Drug. And Then They Saw the Price.” The article reports on a handful of generics with price tags so high they have rained down criticism on the entire pharmaceutical industry, not just the generic manufacturers who are responsible for this.

Now we learn the problem may be deeper, more widespread and more egregious then we thought. The system is broken because some generic drug prices may be “fixed”.

NPR’s Morning Edition reports that “Forty-five states and the Department of Justice are claiming that generic-drug prices are fixed, and the alleged collusion may have cost U.S. business and consumers more than $1 billion.”

The report says because of a price fixing scheme our insurance premiums and those dreaded co-pays increased, while government programs including Medicare and Medicaid overspent for generic prescriptions.

The prosecutor in Connecticut told NPR that companies would work out in advance who would get the lowest price, and the others would put in higher bids to give the appearance of competition.

Pretty upsetting. There’s more.

NPR reports, “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…the common antibiotic doxycycline, which shot the price up 8,000 percent.”  

By comparison, Martin Shkrelli who became infamous after he bought a generic drug company, raised the price of his drug “only” about half that percentage. 

The timing of these investigations also raises concerns about proposed Congressional legislation to help the generic drug industry. To make generics available faster and easier, the CREATES ACT could weaken important safety protocols that protect patients treated for more than 25 serious conditions, including the first gene therapy available in the country. Given the revelations in these legal investigations, decision-makers need to take a much closer, careful look.

There is no pill—generic or otherwise—to ease the pain of alleged price fixing. However, with the help of lawyers, many pharmacies, employee unions and insurance companies are fighting back.

“Law firms that specialize in class actions have already lined up as many as 80 companies that may have paid too much,” says the news report. And NPR quotes an attorney who says perhaps even individual consumers will join the lawsuits. We’ll keep an eye out for you. An eventual settlement could reach $5 billion.

Again, I love the cheap generics I take for some mundane conditions like to avoid shingles or rosacea. But in the case of some rare conditions, generics may not be such a bargain or, even worse, there has been collusion and price fixing. The bottom line is there is a lot to be fixed in the cost of medicine and healthcare in general, and the public has many parties to put under the microscope. As we see here, the folks who make generics are not always the ones wearing white hats.

As always, I welcome your comments and your own story of financial and drug access battles. Write to me at comments@patientpower.info.

Andrew Schorr
Co-Founder, Patient Power LLC

Please remember the opinions expressed on Patient Power are not necessarily the views of our sponsors, contributors, partners or Patient Power. Our discussions are not a substitute for seeking medical advice or care from your own doctor. That’s how you’ll get care that’s most appropriate for you.

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Page last updated on March 9, 2018