As dozens of states pursue numerous generic drug makers for price-fixing, a pair of prominent lawmakers have complained to the Justice Department about a “lack of enforcement” and asked the agency to accelerate its own investigation into the companies.

In a letter sent to the feds on Wednesday, Sen. Bernie Sanders (I-Vt.) and Rep. Elijah Cummings (D-Md.) also asked the Justice Department to probe whether 14 generic drug makers obstructed their own 2014 investigation into “suspicious” price increases for several generic medicines.

The move comes shortly after 44 state attorneys general filed a sweeping lawsuit that accused 20 generic companies of a widespread price-fixing conspiracy. This was the second such lawsuit over the past three years that alleged schemes in which one company would decide to raise prices on a particular drug and others would follow suit. (Here is the earlier lawsuit).

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The lawsuits also detailed how companies — including Teva Pharmaceutical (TEVA), Mylan (MYL), and Sun Pharmaceutical (SUNPHARMA) — which are among the largest generic manufacturers — would agree to divide a market, rather than compete by lowering prices. In some instance, the coordinated price hikes were more than 1,000%.

Despite the copious details found in the lawsuits — such as emails in which executives from rival companies discussed market share arrangements — Sanders and Cummings noted there have, so far, been few criminal charges or enforcement actions.

Last month, Heritage Pharmaceuticals admitted to conspiring to set prices for a diabetes drug and agreed to pay more than $7 million to settle civil and criminal charges. However, only $225,000 of the penalty pertained to the criminal charges, which the lawmakers argued was “wholly insufficient to deter future criminal conduct.” And two years ago, two former Heritage executives pleaded guilty and began cooperating with prosecutors.

“Civil enforcement will not be sufficient to protect consumers,” Sanders and Cummings wrote to the Justice Department. “We write to urge the Department of Justice to prioritize criminal enforcement of federal antitrust laws against generic drug manufacturers… Vigorous antitrust enforcement is vital to ensuring that millions of Americans can afford the medications they need.”

In arguing their case, the lawmakers referred back to documents contained in the latest state lawsuit, which contains an e-mail between attorneys for Teva, Mylan, and Heritage in which they agreed to respond to the 2014 investigation with “polite f-u letters” (see page 342).

At the time, the 14 generic drug makers that were being probed told the lawmakers that prices were rising due the costs of regulatory compliance, drug shortages, and user fees. In their letter to the Justice Department, Sanders and Cummings wrote that these were “at best, grossly misleading, and at worst, intentional lies to Congress.”

“In my view, their ‘polite f-u’ letters designed to obstruct our investigation were clearly illegal,” Sanders said in a statement. “The Department of Justice must hold these bad actors accountable to the fullest extent of the law.”

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  • These generic drug manufacturers are telling lawmakers one of the reasons for the price increases are, ” User Fees”. You would think the lawmakers would say, “what are user fees?”. This is what the PBM’s call drug rebates. PCMA says that
    drug rebates are used for preferential placement on drug formularies, and for excluding other manufacturers.
    If a drug manufacturer pays this “drug rebate” (really extortion) they in turn will increase the price of their drug.
    Competition is good for the consumer! Formularies should be set up by saying, the 3 lowest price manufacturers
    will be put on formulary. Get rid of drug rebates and get rid of the PBM’s ! Then watch and see how fast drug prices
    come down and every state that has been fleeced by these PBM’s will save hundreds of millions of dollars.

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