Connecticut Attorney General William Tong gave a presentation about his ongoing investigation of generic drug price fixing during a Yale School of Public Health Dean’s Lecture on Friday.
Since 2014, Connecticut, along with 48 other states and U.S. territories, has been building a lawsuit against over 20 generic drug manufacturing giants for collusion and illegal price manipulation to eliminate competition. These companies are accused of violating antitrust and consumer protection laws in a case that Tong said will impact the entire healthcare industry.
Tong opened the inquiry in 2014, after The New York Times found that a common drug for heart failure, Digoxin, “went up hundreds of percent in price and there was no market explanation as to why that would be,” he said.
At the start of his inquiry, Tong said he “didn’t expect to find a smoking gun or that initial email that blows the lid off the case. That only happens in Law and Order.” However, he said that what his team uncovered was even more incriminating. A sloppily covered trail of calls and emails unearthed a web of collusion between competing drug company executives where they discussed how to inflate prices so that each company could acquire a larger share of profits, Tong said.
According to one email thread between executives from Teva Pharmaceutical Industries and Heritage Pharmaceuticals, as one company planned to mark up the price of a drug, they notified the other to do the same to eliminate competition on price, Tong explained. Events disguised as industry dinners, girls’ nights out and golf trips were instead opportunities for industry executives to meet face-to-face and determine their price-fixing strategies. They also discussed their pricing structures, wholesaler costs and the percentage of market share each would take.
One Teva executive, Nisha Patel, who had worked at every major generic drug manufacturing company was, according to Tong, “hired to be ‘the head of collusion’… [and to rank] their competitors at how good they were at playing ball and fixing prices.” A spreadsheet created by Patel listed every company Teva colluded with and their level of cooperation. Over 20 drug companies are implicated so far in the multibillion dollar scheme. Some others include Mylan Pharmaceuticals, Inc., Pfizer, Inc. and Glenmark Pharmaceuticals.
“When we see the private industry colluding together to increase their profits, it becomes a large driver for public health professionals to be on the lookout for private industries that are taking advantage of the public,” said Claudia de Bruyn SPH ’21, a School of Public Health student who attended the event.
Over 100 of the most commonly used generic drugs have seen price hikes of up to 1000 percent in the last five years. Some of the affected drugs include those for diabetes, multiple sclerosis, ADHD, cancer, epilepsy and HIV. In response to drug price increases, private health insurance companies, Medicare and Medicaid have shifted this increased cost burden onto the consumer, Tong said. He argued that consumers have been forced to choose between the prescriptions they need and putting food on the table.
“There are only a few drug [companies] … and when you have an oligopoly it’s very easy to collude … Our regulation system is broken,” said Tiffany Hu SPH ’20, also a School of Public Health student who attended Tong’s talk. “The FTC and the DOJ are not doing enough.”
Despite the scope of the allegations against the generic drug companies, Tong said “they will break the law as long as they can afford to. Whatever recovery we get, however many millions of dollars we are able to claw back, they think they can weather that storm.”
However, as the case moves forward, Tong said he hopes that it will dismantle the system that robbed the American people of billions of dollars in the first place and set the drug industry right again.
Generic drugs account for 90 percent of filled prescriptions in the U.S.
Savannah Kucera | firstname.lastname@example.org