Connecticut’s Attorney General Tong and 43 other Attorneys General filed a federal lawsuit alleging that 20 generic drug manufacturers and 15 individuals conspired to inflate prices for 114 drugs that treat a multitude of conditions. Details of the complaint outline a broad, coordinated campaign across the industry to fix prices, allocate markets, and rig bids.
Tong stated that the complaint covers lots of “everyday drugs for everyday conditions” that affect us all. According to the lawsuit, consumers and payers overpaid for medications by billions of dollars. In some cases, the coordinated generic price increases were over ten-fold.
Price-fixing is reprehensible, especially for medications lives depend on. Luckily, it’s also illegal. This lawsuit amplifies an earlier suit filed in 2016 and investigations are ongoing. The Attorneys General are seeking damages, civil penalties, and “actions by the court to restore competition to the generic drug market.” I can’t wait to see what those will be.
First, kudos to the small unit of Connecticut anti-trust attorneys who first noticed extreme generic price increases. They not only wondered why, like the rest of us, but they did something about it. That something was issuing 300 subpoenas, poring over millions of documents and creating a database with 11 million phone records covering over 600 individuals. They didn’t farm it out to a contracted firm; the work was all done in-house over a five-year investigation.
Pharmacy costs are driving healthcare costs both at the national and state levels, rising faster than other sectors. Connecticut residents are hit especially hard by higher drug prices. We rank second highest among states in per-person pharmacy costs, and third highest in the rate of increase in drug prices.
About a decade ago, there was great hope that would change. The U.S. pharmaceutical industry faced a steep “patent cliff” in 2011 and 2012 when dozens of patents for expensive drugs were scheduled to expire, allowing lower cost but equivalent generic medications to substitute. By 2016, 9 out of 10 prescription medications were generics.
It was estimated that consumers and payers would save billions on pharmacy costs after the cliff. But that didn’t happen. Instead of saving money, Americans’ per person costs for pharmaceuticals rose by 14.4% from 2010 to 2014 according to National Health Expenditure data, well above the 8.9% rise in the preceding four years (2006 to 2010). We should be saving cartloads of money, but we aren’t. This lawsuit gives us a great explanation.
The lawsuit also rebuts the standard industry excuse that this is a few bad apples. With 26 companies involved including the largest generic manufacturer, this is a problem for the entire industry. According to Tong, there is no evidence, despite the suits, that the companies have changed how they conduct business, and we are still paying more than we should be. Rising drug prices crowd out other important healthcare priorities such services and people covered by government programs, and important family priorities including basic needs and savings for the future. We can’t afford it. Fixing prices to maintain massive profits at the expense of critical medications is contemptible. This lawsuit will fix both problems.
Ellen Andrews, PhD, is the executive director of the CT Health Policy Project. Follow her on Twitter @CTHealthNotes.
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