Generic Drug Industry Rankled by Price Fixing Lawsuit, Quality Concerns

Regulatory NewsRegulatory News
| 13 May 2019 | By Zachary Brennan 

More than 40 states filed a complaint against 20 generic drug manufacturers on Sunday, alleging that the companies worked together to conspire with each other to set prices of more than 100 generic drugs.

Specifically, the complaint calls out generic drug giant Teva, saying that between July 2013 and January 2015, Teva significantly raised prices on approximately 112 different generic drugs and raised the prices in tandem with competitors on at least 86 of them. “The size of the price increases varied, but a number of them were well over 1,000%,” the suit says.

“Through its senior-most executives and account managers, Teva participated in a wide-ranging series of restraints with more than a dozen generic drug manufacturers, all of whom knowingly and willingly participated,” the complaint alleges.

Other allegations in the complaint, which were based on phone calls, company documents and cooperating witnesses, provide intricate details of how various generic drugmakers discussed pricing and worked together.

Connecticut Attorney General William Tong told 60 Minutes on Sunday: “Between 2013 and 2014, a bottle of doxycycline shot up 8,281 percent from $20 to more than $1800. A bottle of asthma medication, albuterol sulfate, jumped more than 4000 percent, from $11 to $434. Pravastatin, a cholesterol drug, up more than 500 percent, from $27 a bottle to $196.”

And even some who were skeptical of the idea that generic drugmakers were fixing prices, especially as the generic industry group noted prices have declined overall in the last three years, seemed to be surprised by the latest.

Industry analyst Ronny Gal said in an investor note Monday: “The pricing fixing lawsuit is worse than we expected…One should be careful not to take persecutorial document as truth, but there seem to be specific cases in the lawsuit that are going to be hard to explain away. E.g. the Teva executive who sent his Mylan peer an updated price list or the email promising Greenstone they can have a customer.”

Stock prices of major generic drugmakers fell by 10% or more on Monday.

Quality Concerns

Meanwhile, an op-ed in the New York Times on Sunday and another NBC report last week raised questions about the quality of generic drugs made in China and India and questioned the US Food and Drug Administration’s (FDA) ability to inspect overseas facilities.

Both pieces highlight former FDA inspectors who have raised issues with specific plants in India and China and were later linked to import alerts or recalls. And FDA took issue with several details of the reports, such as the idea that overseas plants are only inspected after advanced notice.

FDA on Monday took to Twitter to defend how it has issued nearly five times as many warning letters in FY 2018 when compared to FY 2015.

“FDA does not believe that increased numbers of warning letters reflect a growing problem in drug quality, but rather the effectiveness of our focus on the facilities and drugs that have the potential to be the most problematic,” the agency said.

FDA pre-approval and surveillance inspections in China have also increased from a total of 19 in 2007 to 153 in 2018. Similarly, in India, pre-approval and surveillance inspections have increased from 66 in 2007 to 252 in 2018.

And although FDA flies inspectors into China and India for some inspections, FDA staff stationed in India and China are limited. The agency told Focus last February that in India, there are currently eight staffers, including two in-country drug investigators. In China, FDA said it had 16 staffers there, including three drug inspectors.

Janet Woodcock, director of FDA’s Center for Drug Evaluation and Research, penned a blog post on Monday reassuring the public about the safety and effectiveness of generic drugs.

“Importantly, generic drugs manufactured outside the U.S. must meet the same approval standards as those made domestically; and if they do not meet the FDA’s standards, the FDA can deny them entry into the US,” she wrote. “We use ‘risk-based’ targeting to prevent, uncover and combat data and manufacturing problems. Risk-based means that we strategically direct our inspection and oversight efforts toward facilities most likely to exhibit quality issues in need of resolution.”

Complaint (partially redacted)


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