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U.S. states accuse 26 drugmakers of generic drug price fixing lawsuit (reuters.com)
303 points by 23pointsNorth 33 days ago | hide | past | favorite | 51 comments



“in” is missing in the HN title. They’re not being accused of filing a price fixing lawsuit, they’re being accused in one.


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


The alleged lawsuit...


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.


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/


"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.


+1 for goodrx, they helped a LOT when I was doing residential and commercial carpentry and had a piece of slag bounced off my cheekbone, up under my safety glasses and right into my eyeball.

Many flushings and a few days later I go to the ER (after being threatened with being fired if I applied for workman's comp).

ER doc numbed my eye and scraped out the slag and metal shards in my eye. Prescribed generic antibiotic eye drops.

I thought cool antibiotics arent expensive and per the manufacturer website is literally just diluted penicillin in an eye dropper. Boy was I wrong! 200 with insurance copay, 150 if i paid cash no insurance. Was recommended goodrx by the pharmacist and in 5 mins had created an account and had a valid 'coupon' for the drops at $50.

It's incredibly sad this is where our country is at with regards to health care, that we have to find workarounds like this.


" nothing to do with the cost of production."

The cost of production is generally not a meaningful measure of underlying costs. Although sometimes it is.

Drugs are a little bit like software 'making is hard' while 'copying is cheap'.

Of course, most software doesn't save lives.


Honestly: I don't know enough about drug production to say. That said:

I can see how one generic would be vastly more to produce than another. For example: Prozac's generic is widely taken, as are generic antibiotics and antihistamines. These probably don't require a special batch of pills and can pretty well have dedicated machinery that gets used fully.

In contrast: One Multiple Sclerosis drug, a pill, recently became generic. MS isn't exactly as widespread as allergies, depression, or bacterial infections and not everyone on MS takes this drug. It is cheaper than the name brand - which can easily cost $5k per month - but even as a generic, it is a specialty medicine. I'm not convinced the price is fair in this case, but I am guessing that the manufacturing is quite a bit more expensive due to things like cleaning the old drug out before batching this one and working in smaller batches.

I also sometimes have questions about the difficulty in producing different chemicals: I'm sure some drugs take more power and more steps than others.

Unfortunately, though, there is little to no transparency in drug prices and they don't have to justify their prices to insurances - though, IIRC, some nations do require some types of justification (must work better than the lower-priced alternative already on the market, for example).


what's the name..if you can tell without revealing any sensitive condition? Almost all these meds can be obtained for pennies outside USA. Usually Wikipedia has a price range


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


How can this be remotely legal in a country with anti-trust laws ?


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...


> 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.?


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...


> As a result, the US usually has lower generic drug prices than the EU or Canada

Doing a quick over the internet comparison, comparing with actual visits to different countries: the "simpler" generics seem to be cheaper in the US (as in, getting hundreds of ibuprofen or acetaminophen capsules for a couple of dollars) where things like allergy medication or more specialized drugs are more expensive.

So the "average" might be cheaper (weighted by what?) but the distribution is certainly more long-tailed in the US


Did you look at the study I referenced?

Compared to Canada, 6 of the 7 most prescribed generic drugs are cheaper in the US.


Well the generic market only works when pay for delay and other morally bankrupt acts don't happen: https://www.ftc.gov/news-events/media-resources/mergers-comp...

and it basically doesn't work with biologics since biosimilars are far more difficult to make.


I never understood why pay for delay deals are bad.

It’s basically splitting the difference between two possible scenarios:

Scenario 1: patent is valid, generic drug doesn’t launch for 2 years

Scenario 2: patent is invalid and generic drug can launch immediately

The only reason you see pay for delay deals is when neither scenario is certain. Otherwise, why do a deal?

So they could only be called a “delay” if the patent is invalid. But if the patent was 100% invalid, the generic company wouldn’t negotiate a deal.

Most of the time, pay for “delay” deals get the generic drug on market sooner.


Do you have a link to "The First Question" by Andrew Bodnar? Can't find a source online.



Looks like I wasn't fast enough -- email is in profile if you are so inclined!


Emailed it!


> All my profit comes from winning settlements from pharma companies".

I followed the Canadian generics market in the press in the 80s and 90s. It was awesome, like the Wild West days - "what are they up to this week?"

Sherman and Shulman (Quincy TV show basd on him?) were like mini-Trumps.

That plus the Toronto calculus textbook author who needed a commercial architect ("no straight lines, please") to build his $24 million mansion, Integral House, with its own world-class concert hall. It was Sarek's house in Star Trek: Discovery.

Canadians might be polite, but have just as much business drama.

https://en.wikipedia.org/wiki/Apotex

https://en.wikipedia.org/wiki/Morton_Shulman

https://en.wikipedia.org/wiki/Integral_House


Not to mention the unsolved murder of Barry Sherman and his wife!


Yeah, I read a brief news report on that.

Kind of baffled. I'm familiar with Toronto, and I don't have any likely explanations for that kind of thing there unless it was a suicide pact without a note (they were in their mid-70s), or a badly failed kidnapping attempt.

Sherman was the #12 richest Canadian, so pretty high on the totem pole. I used to see the former #1 billionaire owner of Hudson's Bay (founded 1670!), Ken Thomson, around the main store. He displayed part of his Group of Seven collection publicly on one floor (that group was funded by the Massey-Harris fortune.)

https://en.wikipedia.org/wiki/Kenneth_Thomson,_2nd_Baron_Tho...

https://en.wikipedia.org/wiki/Group_of_Seven_(artists)


You forget where the generic drug manufacturer (intentionally) sells tainted/ineffective drugs.

https://bergermontague.com/whistleblower-lawsuit-against-ran...


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


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%...


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.


Thank you for this, can I ask how you found it? I didn't spend a long time looking but couldn't get anything to show up.


To those that are interested, here's the the full list thanks to Kednicma:

TEVA PHARMACEUTICALS USA, INC.;

ACTAVIS HOLDCO US, INC.;

ACTAVIS PHARMA, INC.;

AMNEAL PHARMACEUTICALS, INC.;

APOTEX CORP.;

ARA APRAHAMIAN;

AUROBINDO PHARMA U.S.A., INC.;

DAVID BERTHOLD;

BRECKENRIDGE PHARMACEUTICAL, INC.;

JAMES (JIM) BROWN;

MAUREEN CAVANAUGH;

TRACY SULLIVAN DIVALERIO;

DR. REDDY'S LABORATORIES, INC.;

MARC FALKIN;

GLENMARK PHARMACEUTICALS, INC., USA;

JAMES (JIM) GRAUSO;

KEVIN GREEN;

GREENSTONE LLC;

ARMANDO KELLUM;

LANNETT COMPANY, INC.;

LUPIN PHARMACEUTICALS, INC.;

MYLAN PHARMACEUTICALS INC.;

JILL NAILOR;

JAMES (JIM) NESTA;

PAR PHARMACEUTICAL COMPANIES, INC.;

NISHA PATEL;

PFIZER, INC.;

KONSTANTIN OSTAFICIUK;

DAVID REKENTHALER;

RICHARD (RICK) ROGERSON;

SANDOZ, INC.;

TARO PHARMACEUTICALS USA, INC.

UPSHER-SMITH LABORATORIES, LLC;

WOCKHARDT USA LLC;

ZYDUS PHARMACEUTICALS (USA), INC.


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.


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...

[2]: https://www.classaction.org/blog/class-action-cvs-clawback-s...

[3]: https://www.modernhealthcare.com/article/20180413/NEWS/18041...


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.


I think at least one is likely to go to prison, like in the Christie's/sotheby's case, especially if someone flips and acts as an informant. Dont count on it being for very long though.


If officers had to go to jail when their corporations committed crimes then you'd never be able to get competent capitalists to run them. Society and the stockholders would suffer.


Awww, poor stockholders.

Maybe we'd see a shift toward companies actually being run in responsible and ethical ways, instead of the present, near total disconnect from reasonable actions and constraints.


SOX already sets up officers to be liable for financial statements, so I don't think this is relevant.


You're saying that there aren't any honest competent capitalists and that in order to be a "competent capitalist", one must be a crook.

You can't conceive of a world where good people can run companies honestly. The only way they'd accept money to run a company is if they're allowed to get away with committing crimes.

I don't even know how to respond this one.


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


    “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.


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.


If a law was broken by a corporation, how could at least one person in that corporation not be guilty of breaking that law? Was it the corporation's AI that did it?


Because you have to prove beyond reasonable doubt that one person broke a specific law. That's not always evident.


Ethics laundering. Like money laundering.


Well, management responsibility is regulated under CFR 21 820 for medical devices. There are equivalent regulations for pharma.

Executives do go to (probation it turns out and apparently not jail all the time) because their company broke the law and they're responsible for the company.

https://www.uspharmacist.com/article/new-fda-strategy-crimin...


That’s one part, the other part is the government has to have a preponderance of evidence of wrongdoing.

Courts and lawyers don’t just take the word of the government as ironclad word of god and pronounce judgement.

Is it seedy, do people do things to hide evidence, do they go to the edge of the law? Yes of course, but the state still has to prove it’s case.


In the Syprine case, the company was convicted of price fixing by the US supreme court. The company changed its name and then just continued with the same business practices. No hands were really slapped.

Companies are made up of people - so if the company you control breaks the law, you have personally broken the law.


In a related area, foreign factories producing identical


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.




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