Possible U.S. Price Fixing Brings Drugmakers Under Fire

Calls to probe whether Sanofi SA, Eli Lilly and Co, Merck & Co Inc and Novo Nordisk A/S colluded to set prices for insulin and other diabetes drugs was made by two prominent U.S. lawmakers who appealed to the federal antitrust regulators to initiate the probe.

A similar letter they sent last fall calling for an investigation into 14 drug companies over price increases of generic drugs precedes the request by U.S. Senator Bernie Sanders and Representative Elijah Cummings.

In their subsequent criminal investigation of generic drugmakers over suspected price collusion, U.S. prosecutors could file the first charges by the end of the year, reported Bloomberg earlier. A Justice Department spokesman declined to comment.

Questions about skyrocketing prices for insulin were raised and chart showing that many of the price spikes appeared to occur in tandem was included in their latest letter to the Justice Department and Federal Trade Commission, Sanders, an independent, and Cummings, a Democrat.

75 years ago, the original patent on insulin, a hormone used by diabetics to control blood sugar levels, has expired, they noted.

“Sanofi sets the prices of our treatments independently,” said Sanofi spokeswoman Ashleigh Koss in an emailed statement to the media.

Novo Nordisk said it stands by its business practices and also said it sets prices “independently”. A spokeswoman for Merck said the company does not make insulin. Merck makes other products to treat diabetes.

It strongly disagrees with the accusations in the letter, said Eli Lilly, in an email to the media. “The insulin market in the U.S. is highly competitive,” the pharmaceutical company said.

After the report of pending Justice Department charges, shares of several generic drugmakers fell on Thursday. Endo International Plc dropped 19.5 percent, Allergan Plc fell 4.5 percent and Mylan N.V. closed down 6.9 percent. There was a fall of 9.5 percent in the shares of Teva Pharmaceuticals Inc Ltd, which recently acquired Allergan’s generics business.

“We do not think the major generic companies have likely participated in significant pricing collusion,” A/B Bernstein analyst Ronny Gal said in a research note.

Previously, in connection with the antitrust investigation by the Justice Department, several generic drugmakers, including Mylan, Allergan, Endo and Taro Pharmaceutical Industries Ltd, had disclosed that they were subpoenaed.

The Justice Department had requested information on four drugs: blood pressure pill digoxin, asthma drug terbutaline sulfate, prilocaine/lidocaine cream and calcipotriene solution, which is used to treat psoriasis, Impax Laboratories Inc said earlier this year.

The company “is not aware of any facts that would give rise to an exposure to the company with respect to these subpoenas,” a spokesman from Teva said.

After Democratic presidential candidate Hillary Clinton tweeted her intent to tackle high prices last year, aggressive drug pricing has come under intense scrutiny.

More than 300 of 1,441 generic drugs analyzed had at least one price increase of 100 percent or more between the first quarter of 2010 and the first quarter of 2015, an August report from the Government Accountability Office found.

The U.S. Department of Health and Human Services’ enforcement arm was asked to investigate generic drug price increases by Sanders and Cummings in February.

Generic drugmakers reined in price hikes this year possibly reacting to the political headwinds.

(Adapted from Reuters)

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Categories: Economy & Finance

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