44 States Sue Drug Companies For Price Fixing

When was the last time you visited your pharmacy? Chances are, the trip left you reeling over a painful price tag. And many others think the same thing. So officials in 44 states have said enough is enough, taking on an apparent nationwide price-gouging conspiracy in what is sure to be a massive legal battle.

A multi-state lawsuit has been filed against dozens of pharmaceutical companies accused of conspiring to fix generic drug prices solely for their own profit. The Connecticut attorney general’s office has uncovered evidence of damning communications between the companies, which claimed recent substantial raises in drug prices were due to higher supply costs. The most recent company to fall under fire has been Teva Pharmaceutical Industries, which charges $2000 per bottle in the U.S. for its HIV-preventative drug, Truvada, when pharmacies in other countries sell the same drug for $8. Some companies may also be guilty of “product hopping,” or rigging the drug-patenting system to continue charging higher prices. 

A Chance Discovery

Back in 2014, two antitrust lawyers working for the Connecticut attorney general’s office happened across an article on the rise of digoxin prices. As reported on 60 minutes, Joe Nielsen, the lead prosecutor in the case, and Mike Cole, head of the antitrust division in Connecticut's attorney general's office, decided to dig a little deeper, finding supplier and competitor agreements set to fix prices on digoxin and over 1,200 generic drugs. Connecticut Attorney General William Tong’s office has since uncovered communications from as far back as 2006 between drug company CEOs, sales directors and marketers.

The communications, evidence many of the accused had taken measures to prevent or destroy, detailed agreements to raise drug prices solely for their own profit. The investigation has since grown into a multi-state lawsuit to force competitive prices back into the drug market. Reuters reports 44 states (or 43 states plus Puerto Rico, according to PBS) have come together against dozens of drug companies, all of which have been allegedly working to gouge American consumers out of billions of dollars.

Massive Price Jumps

During the span investigated, drug companies increased the prices on many of their most popular drugs by an average of 400%, according to the 60 Minutes report. Some are far worse. Take a bottle of doxycycline, which cost $20 back in 2013 — then jumped to a whopping $1800 in 2014, a difference of over 8000%. These price jumps, according to the allegations, may have been organized and planned across numerous drug companies.

Another example is the common asthma medication, albuterol sulfate, which went from $11 to $434, an increase of more than 4000%. Similarly, a bottle of the cholesterol drug pravastatin went up over 500%, from $27 to $196. Most recently, Teva Pharmaceutical Industries has come under fire for charging almost $2000 per bottle for their HIV-preventative drug, Truvada — while people in other countries can get the same drug for as little as $8. Teva Pharmaceuticals profited about $3 billion last year on Truvada alone.

Generic prices are supposed to be more affordable than their brand-name equivalents, with increased competition after a patent expires allowing prices to naturally drop over time. Price fixing has undermined that system, but companies have used other methods as well. Representatives from Teva Pharmaceuticals and others named in the multi-state lawsuit may also have to answer for “product hopping,” or the practice of “improving” upon a medication and then replacing it right when its patent expires. This allows a company to renew its patent and, ultimately, its ability to charge patent-exclusive pricing for essentially the same drug — just when it should start becoming available in its lower-priced, generic form.

Corporate greed might have taken the upper hand, and drug prices might currently be at an all-time high, but change is underway. The foundation has been laid; the battle has begun.

If you’re concerned about doing your part, write your members of Congress and urge them to throw the book at every company that’s robbed the American people through sneaky tactics and greedy practices. Change is possible, but only if we all see it through together.