Lawyer Monthly - November 2021 Edition

s of 2019, the United States spends more on pharmaceuticals per capita than any other country. Retail prescription drug spending amounted to $333 billion in 2017, up from $236 billion in 2007 – an increase of more than 40%. Generic drugs in particular have seen substantial price increases, some by three- figure amounts. With generic drugs accounting for 89% of all drugs dispensed in the US, this is impacting prescription drug spending on a national scale. Many of these price increases are collusive, abrupt and unconscionable, and strongly indicative of price fixing. When these drug prices are artificially high, the counties, cities, and municipalities that sponsor these plans pay the price and incur significant damages. For the uninsured or those with health insurance that does not fully cover costs, high drug prices have even forced patients to ration their medication or even stop it altogether, putting them in danger of serious health complications and death. Pharmaceutical companies also wield an unchecked amount of power, with laws working in their favor to protect their malfeasance. Thankfully, local governments are beginning to fight back: there are several pending large-scale a Why Generic Drug Price Fixing is Holding Your Health Plan Hostage Pharmaceutical spending in the United States is on the rise, due in part to the unrestricted ability of generic drug manufacturers to determine pricing. Marie Napoli, founding partner at Napoli Shkolnik, explores the current landscape of pharmaceutical price fixing litigation in the US and consumers’ options for recourse against inflated drug prices. EXPERT INSIGHT 43 NOV 2021 | WWW.LAWYER-MONTHLY.COM lawsuits alleging price fixing of generic drugs by pharmaceutical companies. What are generic drugs? A generic drug is a pharmaceutical drug that contains the same chemical substance as a drug that was originally protected by chemical patents. It works in the same way and provides the same clinical benefit as the brand- name version. In the absence of anti-competitive collusion, generic medicines normally cost much less than their brand- name counterparts because they do not have to repeat animal and clinical (human) studies that were required of the brand-name medicines to demonstrate safety and effectiveness. Competition among manufacturers of generic drugs typically keeps costs low, making them the preferred choice of government-funded health plans. What is price fixing? Price fixing is an agreement between ostensibly competing parties to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price stays at a given level by controlling supply and demand. In doing so, drug companies can demand nearly any price point for prescription drugs that they think they can achieve. For instance, between 2008 and 2015, the price of clomipramine – a drug to treat depression and nerve pain – increased by 2,700%. Propranolol, which treats high blood pressure and chest pain, increased by 1,700%. EpiPens, meanwhile, increased in cost by nearly 500% over the course of seven years. Price fixing is almost always illegal. Antitrust laws exist to promote competition among companies and prevent the formation of monopolies by requiring that each company establish prices and other terms on its own, without agreeing with a competitor. How drug companies call the shots and avoid prosecution Not surprisingly, there are provisions in place that heavily favor drug companies. Under the Medicare Part D program, which covers retail prescription drugs, the federal government cannot negotiate Medicare drug prices with manufacturers. Instead, Medicare drug prices are negotiated between manufacturers and insurers, giving manufacturers the power to name whatever price they want. The federal government ends up paying more for drugs under Medicare than it does for drugs purchased through other federal programs like the Department of Veterans Affairs (VA) that do allow the government to negotiate prices, or Medicaid, which requires a manufacturer discount As of 2019, the United States spends more on pharmaceuticals per capita than any other country.