Allergan Plc’s Actavis unit got a subpoena from the U.S. Justice Department seeking information on the marketing and prices of its generic drugs, becoming the biggest company yet to draw scrutiny in the government’s widening antitrust probe of the industry. The June 25 subpoena also sought information about communications with competitors regarding the products. While the company didn’t supply further information and didn’t specify the competitors, rivals including Lannett Co., Endo International Plc, Par Pharmaceutical Holdings Inc. and Impax Laboratories Inc. have made similar disclosures in the past several months.
Lannett also reported earlier this year that the U.S. is conducting a criminal antitrust investigation into the generic-drug industry. The company and its senior vice president of sales and marketing were served with grand jury subpoenas.
Generic-drug prices have drawn attention in Washington after sharp increases for some medications in the past few years. Some 10 percent of generic drugs doubled in price between July 2013 and June 2014, and half of all generic drugs rose in price, according to an analysis earlier this year of Centers for Medicare and Medicaid data. One pharmacy benefits manager reported that consumers and insurers paid an average of $13.14 per prescription for the 50 most popular generics in 2010. Four years later, the average was up to $62.10–an increase of 373%.
Allergan is the fourth-biggest maker of generic drugs in the world, measured by sales. The drugmaker agreed last week to sell its generics business to the largest company in the industry, Teva Pharmaceutical Industries Ltd., for $40.5 billion.
Price gouging probes are not limited to the US. Last year, UK government officials lambasted Pfizer’s proposed takeover of AstraZeneca, and it has drawn criticism for its hard line on generic Lyrica use.The U.K.’s Competition and Markets Authority (CMA) said Pfizer and partner Flynn Pharma abused their hold on the market by charging “excessive and unfair” prices for phenytoin sodium capsules, raising costs by as much as 2,600%,
For more than a year, the Justice Department (DOJ) has been pursuing a criminal investigation into the possibility of pricing collusion among makers of generics, and now a report says the probe may also be looking into whether trade associations were used as a conduit to trade drug-pricing information. No specific associations were named. The Generic Drug Association (GPhA), the largest trade group for generics producers, had no specific comment on the report.
Meanwhile, lawmakers have introduced identical bills in the House and Senate that would require generic drug makers to pay additional rebates to state Medicaid programs for any medicine that increases in price faster than the inflation rate. Under current law, brand-name drug makers are required to pay an additional rebate to Medicaid, but generic drug makers are not required to do so. The Congressional Budget Office has concluded that this proposal would save the Medicaid program $500 million over the next ten years.