Apotex among 20 generic drug firms accused of vast U.S. price-fixing scheme

In the summer of 2013, Canadian-based Apotex and two other generic drug companies each increased the U.S. price of their versions of a blood-pressure medicine by a staggering amount — 1,000 per cent.

According to an eye-opening lawsuit filed by 44 American states, the price hikes for doxazosin were no coincidence.

The various manufacturers of low-cost copies of prescription-drug copies are supposed to be competitors, their rivalry theoretically leading to cheaper drugs.

But in the days before the last of the three firms — Teva Pharmaceutical Industries — raised its price, the Israeli-based company’s director of national accounts, Nisha Patel, spoke by phone a number of times with an Apotex sales executive, the suit claims.

It was typical of the cozy relationship between 20 major generic-drug corporations, and part of a mammoth price-fixing scheme that has cost Americans billions of dollars, alleges a consortium led by Connecticut’s attorney general.

Through phone calls, texts, golf outings, and “girls’ nights out”, the companies conspired to increase prices and agreed to share markets without undercutting their rivals, according to the civil suit, filed May 10 in the U.S. District Court in Connecticut.

Then, as government investigators closed in, Apotex and others tried to cover their tracks, destroying electronic evidence, the suit charges.

It may turn out to be the largest “cartel case” in U.S. history, says William Tong, Connecticut’s attorney general.

“We have hard evidence that shows the generic drug industry perpetrated a multi-billion-dollar fraud on the American people,” said Tong in a statement.

Apotex among 20 generic drug firms accused of vast U.S. price-fixing scheme

But the companies themselves strongly refute the charges, which have yet to be tested in court. They say the cost increases are caused by external factors, like drug shortages and disruptions caused by regulators’ actions.

“Apotex denies the allegations made against it in the complaint as they are wholly without merit,” said Jordan Berman, the firm’s vice-president of corporate communications. “Apotex intends to vigorously defend the claims.”

My understanding is that even when there have been shortages in Canada, prices haven’t moved much 

The Apotex cited in the complaint is the U.S. subsidiary of the Toronto-based company. The case concerns the practices of companies operating south of the border, whose relevance to the Canadian situation is unclear.

All provinces now impose price ceilings — as low as 10 per cent of the brand-name version of a drug — so it would be all but impossible for companies to conspire to set artificially high prices in Canada, said Aiden Hollis, a drug-policy expert at the University of Calgary.

“My understanding is that even when there have been shortages in Canada, prices haven’t moved much, so this doesn’t support the collusion hypothesis,” he said.

And yet, Canadian prices for generic drugs were only slightly lower than American prices on average in 2016, according to a report last year by the Patented Medicines Price Review Board.

That report compared the government-mandated price caps here to the list prices in the States, before buyers negotiated lower retail price, said Amir Attaran, a University of Ottawa law professor and health-policy expert.

So, without the collusion alleged in the States, the generic manufacturers’ Canadian operations seem to enjoy much the same benefits, he charged.

“These price ceilings are not competition,” said Attaran. “They’re actually prices controlled at a level that the industry, as kabuki theatre, whines about, but the industry is secretly delighted about.”

The American lawsuit is an expanded version of an earlier case, stemming from five years of investigation spearheaded by Tong’s office in Connecticut.

Drawing on subpoenaed documents and telephone records and evidence from cooperating witnesses, the lawsuit paints a picture of collusion designed to curb competition and inflate prices – and centred largely around Teva.

That alleged conspiracy occurred online and by phone, but also in person, such as at a 2014 gathering organized by a packaging contractor at a country club in Bowling Green, Ky. Between rounds of golf, a high-level Apotex executive, identified only as J.H., and Teva vice president David Rekethaler even stayed together in the host’s home, the suit says. Rekethaler has since become vice president of sales at Apotex.

As well as the doxazosin price hike, the two companies both doubled the cost of their generic versions of the cholesterol drug pravastatin in 2015, the suit alleges. Earlier that year – with Rekethaler and J.H. “speaking frequently” – Teva also co-ordinated Apotex’s entry into the market for another cholesterol drug in a way that neither company had to lower its price, the complaint claims.

Like many of the companies, Apotex sought to eliminate evidence as the investigation progressed, destroying one employee’s “custodial file” of emails and other electronic communications, alleges the suit.

Published at Mon, 13 May 2019 23:40:16 +0000