Going after the generics Goliath
Collusion by makers of generic prescription drugs is helping push health care costs in the United States higher each year. The resulting soaring prices for many generic medicines has resulted in increased copays and out-of-pocket expenses for patients.
Among the causes and effects making American health care unaffordable for many and expensive for all, this manipulated pricing of generic drugs looms large and ugly. It is a triumph of corporate greed, placing unfairly garnered profit above the societal goals of a healthy populace, a workable economy, life, liberty, and the pursuit of happiness, which includes good health.
In a lawsuit filed last week in U.S. District Court, first-term Connecticut Attorney General William M. Tong accuses 20 leading manufacturers of generic drugs with conspiring to fix prices on 100 drugs. The filing brings to a head an investigation begun in 2014 by Tong's predecessor, George Jepsen, and departmental attorneys. Forty-three states have joined the suit.
Among the corporate defendants are Pfizer Inc.; Greenstone, LLC, a subsidiary of Pfizer; Teva Pharmaceuticals; and Mylan Pharmaceuticals, which sells the EpiPen device for emergency allergic reactions, and which has already had to pay the federal government $465 million for overcharging Medicaid for the devices for 10 years.
A $465 million penalty conveys a sense of the size of the profit margins that have caused pharmaceutical companies to sell their souls. The 44-state suit depicts corporate drug companies as conspiratorial schemers who have consumers at their mercy. Prices seem to have no ceiling because, so far, private and government insurers have kept paying — at rising cost to health care and the overall economy.
Tong announced the filing of the suit in connection with an appearance on CBS' "60 Minutes" last Sunday. It is the second Connecticut lawsuit filed against the generic drug industry. This filing names Teva as the lead conspirator and says prices have gone up as much as 2,000 percent on certain drugs as a result of collusion and backroom agreements not to compete. That contravenes the intent of the 1984 Drug Price Competition and Patent Term Restoration Act.
Consumers — patients, that is — need relief, and The Day salutes the two investigators in the attorney general's office, Michael Cole and Joseph Nielsen, whose dogged and inspired work made the lawsuit possible. Other states owe Connecticut a debt of gratitude for taking the lead.
The courts are not the only avenue, however. States are fighting back in the marketplace: Florida and Vermont want to import from Canada, and California is considering bulk purchasing for drugs used in the state Medicaid program, prisons and for government employees, according to AARP, whose constituency is the demographic of retired Americans who have the most prescriptions. A majority of states have bills in their legislatures addressing drug prices.
Consumers may yet revolt, too. AARP has recently announced a campaign it calls "Stop Rx Greed." The May edition of the AARP Bulletin describes drug companies blocking access to drug samples that would allow development of generics and paying hundreds of millions of dollars to generics manufacturers to keep their products off the market.
Congress, as bitterly divided as it is over the Affordable Care Act, should act on the drug-pricing scam through one or more bipartisan bills currently aimed at helping consumers.
There was some encouraging news last week when the House approved the Strengthening Health Care and Lowering Prescription Drug Costs Act. The bipartisan bill seeks to lower prescription drug costs, including by helping lower-priced generic drugs get to market faster.
It passed the House 234-183, with Rep. Joe Courtney, D-2nd District, in favor.
Currently, the first generic applicant to FDA is granted 180 days of market exclusivity, but some generics then fail to move the product to market, thereby blocking other generics from applying to FDA in what is known as "parking." The bill would get generics to market earlier by changing the rules on "parking."
However, the failure to take one significant step that has been advocated for years − giving Medicare the power to negotiate drug prices for those it covers − may be sending the worst of all signals to the pharmaceutical industry, both generic and branded. Manufacturers negotiate prices with European governments, and still make profits at much lower consumer costs.
The failure of Congress to give Medicare some teeth in its purchasing surely seems like a nod and wink at the obvious price-fixing practice that the Connecticut suit addresses. No wonder, perhaps, given that in the 2016 election cycle political contributions by the pharmaceuticals and health products industry totaled $64.3 million, according to OpenSecrets.org.
This is everyone's fight. Anyone who does not have a prescription now will have one someday and will need to be able to afford it.
The Day editorial board meets regularly with political, business and community leaders and convenes weekly to formulate editorial viewpoints. It is composed of President and Publisher Tim Dwyer, Editorial Page Editor Paul Choiniere, Managing Editor Izaskun E. Larrañeta, staff writer Julia Bergman and retired deputy managing editor Lisa McGinley. However, only the publisher and editorial page editor are responsible for developing the editorial opinions. The board operates independently from the Day newsroom.
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