Table of Contents
Antibiotics, with the discovery of penicillin, have contributed greatly to extending average life spans around the world. They treat bacterial infections specifically, controlling or completely killing off the infection. Medicine saves lives and needs to remain as accessible as possible to all. However, some old, off-patent antibiotics still carry a hefty price tag.
In this second and final part of our exploration into the high prices of penicillin and old antibiotics, we will shed some light on a major lawsuit involving many major generic manufacturers and the role of Congress in drug prices in general.
Check out part I if you have not already. We go into potential reasons why old antibiotics continue to experience price hikes.
Unite with your fellow citizens and fight crony capitalists and corrupt officials! Our crowdsourced, crowd-approved Total Theft Report shows you just how much is being stolen from the American public.
Generic Drug Price Scandal
In truth, railing against old antibiotics retaining a high price appears misguided. The realities of manufacturing costs and lack of profitability deserve consideration. Even seemingly predatory prices for ‘specialty drugs,’ within reason (admittedly ambiguous), can have some solid justification.
However, in 2016, a massive scandal erupted involving generic manufacturers, including but extending far beyond old antibiotics. An alleged plot involving price fixing, bid rigging, and collusion between big pharmaceutical companies.
Overview
44 states filed a far-reaching lawsuit against 20 pharmaceutical companies and 15 individuals. Over 100 generic drugs had risen in prices by up to 1000%, in some cases.
Connecticut Attorney General William Tong has led the lawsuit, stating in a press release:
“We have hard evidence that shows the generic drug industry perpetrated a multi-billion dollar fraud on the American people. We have emails, text messages, telephone records, and former company insiders that we believe will prove a multi-year conspiracy to fix prices and divide market share for huge numbers of generic drugs. These are drugs that people in this country rely on every day for acute and chronic conditions and diseases from diabetes and cancer to depression and arthritis. We all wonder why our healthcare, and specifically the prices for generic prescription drugs, are so expensive in this country—this is a big reason why.”
“This is most likely the largest cartel in the history of the United States,” Assistant Attorney General Josh Nielsen said to the Washington Post.
Teva Industries, the alleged big player
Colossal Israeli drug manufacturer Teva Pharmaceutical Industries is one of the companies that came under federal investigation. The corporation had received criticism in 2018, for charging $18,375 per bottle (100 pills) for their generic medication to treat a rare genetic disorder called Wilson’s disease.
According to a Department of Justice (DOJ) August 2020 press release, “Teva Pharmaceuticals USA Inc. (Teva) has been charged with conspiring to fix prices, rig bids, and allocate customers for generic drugs.” The pharmaceutical company allegedly overcharged consumers at least $350 million, on all kinds of medication (including a generic that treats brain cancer). The document reports three different charges against Teva, where the corporation reportedly colluded with a long list of their supposed competitors.
The press release continues, “Teva is the seventh company to be charged for its participation in conspiracies to fix prices, rig bids, and allocate customers for generic drugs. Five previous corporate cases were resolved by deferred prosecution agreements, and Teva’s co-conspirator Glenmark is awaiting trial. Four executives have also been charged; three have entered guilty pleas, and one is awaiting trial.”
In the U.S., drug prices, on average, are 2.56 times higher than those in 32 developed nations. Americans spend about $1,200 on prescription medication annually.
Old Antibiotics
As it specifically pertains to old antibiotics, one drug, in particular, came to the fore.
Doxycycline, present on the WHO’s List of Essential Medicines, treats bacterial infections such as pneumonia, acne, and chlamydia. It was patented in 1957, got released for commercial use a decade later, and has long been available as a generic drug. This antibiotic, along with diabetes treatment, was the first case to open up the massive lawsuit detailed above.
DID YOU KNOW?
In 2017, doxycycline was prescribed over 6,681,549 times in the U.S. alone.
According to a DOJ December 2016 press release, “Two former senior generic pharmaceutical executives [of Heritage Pharmaceuticals] were charged by Information for their roles in conspiracies to fix prices, rig bids and allocate customers for certain generic drugs. According to the Informations, Jeffrey Glazer, the former CEO of a generic pharmaceutical company, and Jason Malek, the former president of the same company, conspired to fix prices, rig bids, and allocate customers for an antibiotic, doxycycline hyclate…”
From a Congress letter requesting information from Heritage Pharmaceuticals
Doxycycline supply shortages?
Nevertheless, supply shortages of doxycycline unrelated to collusion and monopolistic practices have been cited by pharmaceutical companies as the reason for that sudden boost in prices. While supplies did experience a shortage, those investigating the case allege pharmaceutical companies were collectively exploiting customers during this dearth of doxycycline.
Two accounts, one from Glazer and another from Connecticut Attorney General George Jepsen, can be found in the class action lawsuit filed in Pennsylvania:
“I participated in a conspiracy with other persons and entities engaged in the production and sale of generic pharmaceutical products including Doxycycline Hyclate, the primary purpose of which was to allocate customers, rig bids and fix and maintain prices of Doxycycline Hyclate sold in the United States in furtherance of the conspiracy. Defendant and his co-conspirators, including individuals that the defendant supervised at his company and those he reported to at his company’s parent, engaged in discussions and attended meetings with the co-conspirators involved in the production and sale of Doxycycline Hyclate. During such discussions and meetings, agreements were reached to allocate customers, rig bids, and fix and maintain the prices of Doxycycline Hyclate sold in the United States.”
Defendant Glazer
“In March 2014, Mayne [Pharma] presented a bid to one of Heritage’s nationwide pharmacy accounts. This led to telephonic, e-mail, and texted discussions between representatives of Mayne and Heritage over the next several months. In November of 2014, Mayne made offers to the One-Stop Program of McKesson Corporation (“McKesson”) (a wholesaler) and Econdisc Contracting Solutions (“Econdisc”) (a group purchasing organization (“GPO”) that includes Express Scripts, Kroger, and Supervalu). Malek contacted personnel at Mayne to discuss the situation and raised the idea that Heritage and Mayne could allocate customers by having Mayne withdraw its offer to McKesson. Malek worked out an agreement with Mayne by November 25, 2014, which Glazer subsequently confirmed. Follow-up communications occurred in December 2014 by text messaging and an in-person meeting at a conference of the American Society of Health-System Pharmacists held on December 9, 2014.”
Press Release from George Jepsen
Aftermath
Per a May 2019 DOJ press release, “[G]eneric drug manufacturer Heritage Pharmaceuticals, Inc. will pay over $7 million in a civil settlement to resolve allegations of a scheme to fix prices and allocate customers for several of its drugs.”
Heritage Pharmaceuticals as well as Aurobindo Pharma USA, Inc., Citron Pharma, LLC, Mayne Pharma (USA), Inc., Mylan Pharmaceuticals, Inc. and Teva Pharmaceuticals USA, Inc. have been investigated or are currently being investigated for antitrust violations (per the lawsuit cited above). Verdicts for some of the companies remain pending (as of October 2020).
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Pharmaceutical Lobbying
The best forms of prevention eradicate at the source, significantly the chance of occurrence. This responsibility lies on our lawmakers and regulators, those voted into Congress, who should act based on what they genuinely believe to be in the public’s best interest. The deep ties between Congress and the pharmaceutical industry cannot go unmentioned.
The Commonwealth Fund, a private U.S. foundation promoting a higher-performing healthcare system, issued a report on high drug prices in 2017. The document states, “U.S. prescription drug pricing over the past decade reflects a distortion of the policies that Congress has enacted to balance innovation and price competition and enable access to affordable medicine…” Clearly, there’s been an issue when old antibiotics can be repackaged as new ‘specialized’ medicines.
According to the Commonwealth Fund, the “U.S. spends more on health care than other high-income countries but has worse outcomes.” Are average Americans getting ripped off? FInd out what citizens have discovered…
Where are the Regulators?
The American Retiree Education Foundation and the National Retiree Legislative Network cited reports from OpenSecrets.org, Center for Responsive Politics. “The pharmaceuticals and health products industry contributed $25.6 million in campaign and leadership PAC contributions to House and Senate incumbents and challengers in the 2018 mid-term election cycle. The industry also spent $216.1 million lobbyings in Washington, DC in 2018.”
In fact, the pharmaceutical/healthcare industries collectively spend the most amount on lobbying. $298,524,329 in 2019 alone, over $100 million more than the second-largest spending industry.
The anti-corruption organization RepresentUs sums up the persuasive power of millions, in the form of Pay to Play and slush funds. They write, “Getting into and staying in Congress takes a ton of money these days: On average, a candidate has to raise more than $14,000 a day, 7 days a week to win a Senate seat. And a candidate needs upwards of $1.6 million to win a seat in the House. That’s a lot of cash to come up with…Lobbyists come to the rescue! They don’t just donate directly to the candidate’s campaign fund, they also sponsor big fundraisers that raise tens of thousands of dollars for the Congressmember in a single afternoon.”
If money often wins elections (which it appears to), politicians getting on the good side of the biggest lobby makes sense. That, however, means we have to pay the price.
Eliminate Price Gouging Across Industries
Rigged drug prices negatively affect each and every one of us. Some more than others, but most, if not all, of us, will need medicine at least once in our lives. We aren’t talking about luxury goods here; medications are essential goods, requirements for you, your loved one, a friend of a friend to live. Being able to afford prescriptions can actually be a matter of life and death. We cannot let corporations unethically boost profits by exploiting our vulnerabilities and frailties.
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The ZeroTheft Movement does not have any interest in partisan politics/competition or attacking/defending one side. We seek to eradicate theft from the U.S economy. In other words, how the wealthy and powerful rig the system to steal money from us, the everyday citizen. We need to collectively fight against crony capitalism in order for us to all profit from an ethical economy.
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