
U.S. states accuse 26 drugmakers of generic drug price fixing lawsuit - 23pointsNorth
https://www.reuters.com/article/us-usa-drugs-antitrust-lawsuit/u-s-states-accuse-26-drugmakers-of-generic-drug-price-fixing-in-sweeping-lawsuit-idUSKBN23H2TR
======
twoodfin
“in” is missing in the HN title. They’re not being accused of filing a price
fixing lawsuit, they’re being accused in one.

~~~
joshstrange
Also "U.S. states" = "United States states". In other news, ATM Machines...

------
danbmil99
I recently switched insurance and was surprised to find that a generic drug I
take cost me $500 for 30 tablets. Another generic I take is $10 for a hundred
fifty tablets.

Pretty sure these ratios have nothing to do with the cost of production.

~~~
hiram112
It's doubtful that the insurance company is paying $500 either. I can't
believe the type of scam these drug companies run.

I take a medication whose patent expired before I was born. Over the years the
price has actually gotten more and more expensive in the US, though I've
purchased it in the EU for around $20 / month.

In the US, using my insurance card, the pharmacy charges me $175. I pay that
out of pocket until I hit my deductible of $2K, so it is quite expensive.

However, if I don't use my insurance card, the pharmacy has a 'different'
price of $40. WTF? My insurance company is apparently in bed with the pharmacy
and manufacturer to rip off their own insured customers.

So I pay for it with cash for $40 without using my card, and then submit it
later towards my deductible (which of course they deny 'till I threaten small
claims court).

It's absurd and would be a violation of RICO laws for any other industry.

Regardless, if you're paying out of pocket due to a high deductible, use
GoodRx at the pharmacy without even mentioning your insurance - just pretend
you're completely uninsured - and then submit the receipt later. It will save
you a lot cash.

* [https://www.goodrx.com/](https://www.goodrx.com/)

~~~
TheOtherHobbes
"My insurance company is apparently in bed with the pharmacy and manufacturer
to rip off their own insured customers."

Yes. And so are hospitals and other medical service providers, many of whom
are owned by the same companies that own the insurers.

------
resoluteteeth
See also "pay for delay" deals where originator companies pay generic
companies not to sell generic versions of a drug.

------
refurb
The generic drug industry in the US is pretty unique. Thanks to the Waxman-
Hatch generic drug bill in 1984, it went from really hard to get a generic
drug approved in the US (you had to start from scratch) to really easy (just
prove your drug is the same and use the branded drugs data for approval).

As a result, the generic drug industry in the US is _very_ competitive. When a
blockbuster drug like Liptior goes generic, you have up to a dozen companies
vying to be the first generic approved because that gets you 180 days of
exclusivity (you're the only generic, you're cheaper, everyone switches to
you). Typically the first generic is priced around 90% of the brand name price
(most of it profit), but once other generic companies get approval (after 180
days), the price drop to 5-10% of the branded drug price. This is typically
very close to the cost of manufacturing. There are also "generic substitution"
laws in most states that _require_ pharmacists to fill prescriptions with the
generic. So once the patent runs out, the branded drug loses sales very fast.

As a result, the US usually has _lower_ generic drug prices than the EU or
Canada.[1] And generic drugs tend to get approval very quickly after the
patent expires in the US.

However, on the flip side, because the market is so competitive, margins are
razor thin. If you want to understand the generic drug market, read the book
"The First Question" by Andrew Bodnar. He was convicted by the DOJ for anti-
competitive practices as a VP at BMS and wrote the book as a part of his
sentencing (book is on the public record). The quote that stuck with me was
from Barry Sherman of Apotex (massive Canadian generic drug company). It was
something along the lines of "I make zero profit off my drugs. All my profit
comes from winning settlements from pharma companies".

As a result of the razor thin margins, weird things start to happen. The first
is price fixing, as per this article. Nobody wants to compete on price in
generic markets (though that's the only differentiator between identical
drugs!) because their margins already suck. Allegedly, these companies
colluded to not drop prices.

The other thing that happens is companies just say "screw it" and drop out of
the market. Why not? The profit margin is near zero. This is especially true
with companies selling sterile fill product (i.e. injectables). It's _really
freakin hard and expensive_ to run a sterile fill plant, so when something
goes wrong, companies often just shut down the line.

What happens? Drug shortages. Prices rises.

Then what happens? Some small company realizes everyone else dropped out of
the market. So they quietly get their generic approved and jack the price as
high as they can. You'll see a drug that was $0.10 per tablet go to $10 per
tablet. Then this attracts other competitors (or sometimes it doesn't), prices
drop and the cycle starts again.

[1] Can't find exact study, but here's an FDA study comparing generic drug
prices between US and Canada: [https://www.fda.gov/drugs/resources-you-
drugs/study-us-gener...](https://www.fda.gov/drugs/resources-you-drugs/study-
us-generic-drugs-cost-less-canadian-drugs)

~~~
saghm
> If you want to understand the generic drug market, read the book "The First
> Question" by Andrew Bodnar. He was convicted by the DOJ for anti-competitive
> practices as a VP at BMS and wrote the book as a part of his sentencing
> (book is on the public record).

Was he literally sentenced to write a book (among other things, I'd have to
assume)? If so, I have so many questions. Was this part of a plea deal, or did
a judge decide it on their own? Is this a common thing? Has this judge done
that before? If someone is sentenced to write a book, how is the timeline set
for it? What happens to the profits from sales? Who pays for the
editing/publishing/etc.?

~~~
refurb
The judge made it a part of the sentencing, plus 2 year probation. The judge
was hoping his story could serve as a warning to other potential white-collar
criminals (Bodnar claims he's innocent in the book, so not quite the warning
the judge was hoping for).

The book was in the court records, but seems to have been pulled as I think
Bodnar is trying to sell it now.

 _" When former pharmaceutical executive Andrew G. Bodnar pleaded guilty to
white-collar crime in 2009, the judge didn't throw the book at him—he ordered
him to write one.

Reflect upon "the criminal behavior in this case so that others similarly
situated may be guided in avoiding such behavior," said the judgment from U.S.
District Judge Ricardo M. Urbina in Washington. And make it 75,000 words.

The finished book, written during Dr. Bodnar's two-year probation, has been
submitted into the court record."_[1]

[1][https://www.wsj.com/articles/SB10001424052702303877604577382...](https://www.wsj.com/articles/SB10001424052702303877604577382511890405218)

------
vxNsr
Anyone have the actual law suit? Or a list of drugs and all the drug makers?
Reuters only names 8 of the alleged 26

~~~
Kednicma
I wanted to know too. Here's the suit [0]. The principal manufacturer targeted
is Teva. You'll have to click through for the full list, because it is
massive, and has its own entries in the multi-page table of contents.

I also wanted to know which states are not (yet) party. They appear to be
Arkansas, California, Georgia, New Hampshire, South Dakota, and Wyoming.

[0]
[https://portal.ct.gov/-/media/AG/Downloads/GDMS%20Complaint%...](https://portal.ct.gov/-/media/AG/Downloads/GDMS%20Complaint%2051019%20FINAL%20REDACTED%20PUBLIC%20VERSIONpdf)

~~~
deathanatos
Good grief.

The article states,

> _Attorneys general from 46 states,_

So what _four_ states aren't party?

> _Arkansas, California, Georgia, New Hampshire, South Dakota, and Wyoming_

…that's _six_. So the actual complaint, what does that list? _43 states_.

Texas. Texas is not in the complaint, plus the six you list.

The only way I can get the article's 46 is if I count just the number of lines
in the complaint, but Puerto Rico is listed and some states span two lines due
to the length of their names. Thankfully we abbreviated Rhode Island.

------
econcon
My friend imports medicines from India. While US often accuses Indian
companies of selling shoddy quality drugs, it's interesting they wanted HCQ
from India and didn't question its quality.

------
xtiansimon
Don't forget the long running lawsuits against prescription drug plan managers
[1][2][3]. You can't have a health plan without a prescription drug plan
manager, and if you live in NY, CVS Caremark appears again and again on the NY
State of Health website--I know, I looked, because CVS Caremark does not cover
prescriptions at Walgreens near my home--Anti-competitive fracking bull $#!T.

NOTE: I don't know the sources, but the descriptions are sufficient. More
research will reveal more coverage--I found SF Chronicle article, but was
paywalled.

[1]: [https://www.wkyc.com/article/money/consumer/whistle-
blower-f...](https://www.wkyc.com/article/money/consumer/whistle-blower-files-
lawsuit-against-cvs-caremark-for-falsifying-drug-prices/95-560447195)

[2]: [https://www.classaction.org/blog/class-action-cvs-
clawback-s...](https://www.classaction.org/blog/class-action-cvs-clawback-
scheme-overcharges-insured-patients-for-generic-drugs)

[3]:
[https://www.modernhealthcare.com/article/20180413/NEWS/18041...](https://www.modernhealthcare.com/article/20180413/NEWS/180419954/cvs-
pharmacy-benefit-manager-unit-sued-for-false-claims)

------
spocklivelong
I hope that at least one executive ends us spending some jail time, instead of
settling the case (which I think is most likely). Price fixing generic drugs
will leave out access to those that are most financially vulnerable, all while
coporationss make big bucks.

~~~
missedthecue
You have to personally break a law to go to prison.

~~~
augustt

        “Through phone calls, text messages, emails, corporate
        conventions, and cozy dinner parties, generic
        pharmaceutical executives were in constant communication,
        colluding to fix prices and restrain competition”
    

These things were done by people. Everyone who participated in this
_personally_ conspired to commit a crime. Of course this is probably not how
it will be seen in the eyes of the legal system.

~~~
vikramkr
It will be seen that way - people have gone to jail for antitrust stuff.
Especially if one person flips on the others. Is it guaranteed to happen? No,
but it might, and it has before.

------
aj7
In a related area, foreign factories producing identical

~~~
aj7
In a related area, American companies produce on-patent drugs in owned
European factories by process-copy-identical methods. They purposely do NOT go
through the paperwork of obtaining FDA approval for these processes and
factories, though identical. (Of course rigorous European approvals are
obtained.) NOW, it becomes illegal to import the European versions into the
U.S. and Customs cooperates by random seizure of small shipments, thereby
harassing American, mostly older citizens on limited budgets, directly.

