The suit, which names companies including Heritage and Mylan, is the result of a two-year long investigation by the federal Department of Justice. It centers around manipulation of the prices of two generic drugs -- the antibiotic doxycycline hyclate (Doxy DR) and the diabetes drug glyburide -- but Pennsylvania Attorney General Bruce Beemer said the companies involved are still being investigated to see if they did the same with other drugs.
It seems like a cut-and-dried case of Big Pharma price gouging, but there is another angle to the story. Noting another recent case that did not end in federal prosecution, the Anti Media writer Alice Salles suggests that the companies' major error in this case wasn't engaging in price fixing … it was doing so without the endorsement of Congress.
Blatant conspiracy
According to the federal complaint, the price-fixing scheme was concocted and led by former executives of Heritage Pharmaceuticals. These executives and the executives of Mylan, Mayne, Aurobindo, Teva and Citron then engaged in "numerous illegal conspiracies in order to unreasonably restrain trade, artificially inflate and manipulate prices and reduce competition," according to the New York Attorney General's office. They coordinated directly with each other on pricing and competition decisions via phone calls, text messages and meetings at trade shows. (RELATED: Read Corruption.news for more reports of conspiracies and corruption.)
The suit says that the companies kept prices artificially high by agreeing to avoid competing with each other in certain markets. For example, Heritage and Mylan executives divided up the market share for Doxy DR in order to avoid a price war that would lead to both companies having to charge lower prices. Thus, Mylan agreed to "walk away" from selling to a large national wholesaler and a large pharmacy chain, allowing Heritage to have those companies' business uncontested.
The plaintiffs claim that the companies knew their actions were illegal. They point to the fact that as soon as the investigation began, the companies began trying to hide their actions and the evidence of their intentions.
It's legal when Congress participates
The suit says that the companies' illegal behavior caused "significant, lasting and ultimately harmful rippling effect in the United States healthcare system." By artificially inflating prices, the companies increased their own profits at the cost of consumers, doctors, hospitals and insurers.
What about another recent case, then, in which Mylan artificially boosted prices at the cost of consumers, doctors, hospitals and insurers? In 2007, Mylan acquired the rights to the epinephrine auto-injector EpiPen, used to survive life-threatening allergic reactions. At the time, the EpiPen cost $7 apiece. Since then, Mylan has steadily boosted the price to $600 for a double package. It is no longer sold as a single injector, even though the devices expire within a year. Families that can't afford the price tag for two at once are out of luck
After acquiring EpiPen, Mylan began heavily lobbying the FDA for changes to the rules for epinephrine prescriptions. The FDA agreed to recommend the devices for a much wider range of people including those "at risk" of allergies. Heavy lobbying also resulted in Congress passing a law in 2013 incentivizing states to require schools to stock EpiPens.
At the same time, Mylan engaged in tactics to block competitors from entering the market. And while the company is being investigated for antitrust violations in regard to this latter behavior, the legal system seems fundamentally unable or unwilling to respond to the company's other blatant ethics violations. (Follow more news about "legal" drug cartels at DrugCartels.news)
"What this story shows us is that if companies conspire among themselves to keep competitors at bay, the federal government will accuse them of breaking antitrust laws," Salles wrote. "But when Congress approves increased regulation, effectively barring smaller companies from competing while creating monopolies, price-fixing is perfectly acceptable."
Mylan CEO Heather Bresch is the daughter of U.S. Senator Joe Manchin of West Virginia.
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