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Investigation of generic ‘cartel’ expands to 300 drugs

Workers check pharmaceutical products during the production process at Teva Pharmaceutical Industries factory in Petah Tikva, Israel. In a court filing, Teva said allegations of a price-fixing conspiracy “conclusory and devoid of any facts.” (Ahikam Seri/Bloomberg News)
By Christopher Rowland December 9
Executives at more than a dozen generic-drug companies had a form of shorthand to describe how they conducted business, insider lingo worked out over steak dinners, cocktail receptions and rounds of golf.

The “sandbox,” according to investigators, was the market for generic prescription drugs, where everyone was expected to play nice.

“Fair share” described dividing up the sales pie to ensure that each company reaped continued profits. “Trashing the market” was used when a competitor ignored these unwritten rules and sold drugs for less than agreed-upon prices.


The terminology reflected more than just the clubbiness of a powerful industry, according to authorities and several lawsuits. Officials from multiple states say these practices were central to illegal price-fixing schemes of massive proportion.


The lawsuit and related cases picked up steam last month when a federal judge ruled that more than 1 million emails, cellphone texts and other documents cited as evidence could be shared among all plaintiffs.

HHS Sec. Alex Azar on 'complete rewiring' of the drug pricing system in America
Health and Human Services Secretary Alex Azar on June 20 discussed his department's proposals to reduce drug prices. (Washington Post Live)

What started as an antitrust lawsuit brought by states over just two drugs in 2016 has exploded into an investigation of alleged price-fixing involving at least 16 companies and 300 drugs, Joseph Nielsen, an assistant attorney general and antitrust investigator in Connecticut who has been a leading force in the probe, said in an interview. His comments in an interview with The Washington Post represent the first public disclosure of the dramatically expanded scale of the investigation.

The unfolding case is rattling an industry that is portrayed in Washington as the white knight of American health care.

“This is most likely the largest cartel in the history of the United States,” Nielsen said. He cited the volume of drugs in the schemes, that they took place on American soil and the “total number of companies involved, and individuals.”

The alleged victims were American health-care consumers and taxpayers, who foot the bills for overcharges on common antibiotics, blood-pressure medications, arthritis treatments, anxiety pills and more, authorities say. The costs flowed throughout the system, hitting hospitals, pharmacists and health insurance companies. They hit consumers who lack prescription drug coverage and even those with insurance, because many plans have high deductibles and gaps on prescription drug benefits.

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https://www.washingtonpost.com/business/economy/investigation-of-generic-cartel-expands-to-300-drugs/2018/12/09/fb900e80-f708-11e8-863c-9e2f864d47e7_story.html?