How Anti-Trust Lawsuits are Impacting Generic Medicines?

Various types of generic medicines

Various types of generic medicines

 

When a pharmaceutical company discovers a new medication, it receives a patent that lasts for 20 years from the drug’s invention. During that time, the company has the exclusive right to sell the medication, and afterward the formula becomes available for other manufacturers to produce. Ideally, that system protects the enormous investments required to conduct pharmaceutical research, and it provides a means for the cost of drugs to come down over time.

 

In recent years, however, generic medicines have been the subject of controversy. Orphan drugs, which treat rare diseases and have a small market, have captured headlines as prices soared 26 times over the past two decades. But across the generic medicines market, prices have been increasing, and the emerging results of a Department of Justice investigation launched in 2014 are showing us why.

 

Over the course of the investigation, pharmaceutical companies including Teva, Mylan, Heritage Pharmaceuticals, Dr. Reddy’s and Allergan have been investigated for price fixing, and in 2017 Heritage Pharmaceuticals pled guilty. Because of the impact price fixing has on state governments, 47 states’ Attorneys General have brought cases against 15 pharmaceutical defendants. Price fixing, agreeing to divide markets to reduce competition, agreeing to maintain minimum prices, and other forms of collusion between generic medicine makers are unlawful. They undermine the whole principle of allowing the market to control price after the patent period has run out.

 

As this blog explores, municipal governments are also impacted by price fixing, since many self-insure and, as a consequence, pay medical benefits for their employees. Just like state governments, municipal governments can make the case that generic medicine makers that engage in anti-competitive practices artificially increase the prices of generic medicines, causing them harm by forcing them to pay those inflated rates.

 

As state governments, local governments, and even individuals join the Department of Justice in bringing suits against these companies, it provides not only a means of relief for the burden of excessive cost but also a cudgel to prevent the industry from continuing the same practice. For municipal leadership and individuals who have been adversely affected by price increases, speaking with a class action law firm about bringing a suit is an important first step.