2. Generics charged with price collusion
Teva Pharmaceuticals and 19 other generic drugmakers worked together to raise prices by as much as 1,000% without losing market share, a new lawsuit brought by 44 states alleges.
- The lawsuit is part of an ongoing investigation led by the state of Connecticut.
Why it matters: Generics are the U.S.' primary cost control mechanism for prescription drugs, and make up the vast majority of prescriptions filled. The allegations in this lawsuit, if true, were ultimately paid for by patients and taxpayers.
Details: Prosecutors accuse the generic companies of divvying up drug markets to create a "fair share" for each competitor. They also communicated about prices, the suit alleges, and agreed to collectively raise or maintain prices for a particular drug.
- In theory, when new generic competitors enter a particular market, prices go down as a way to maintain sales.
- This is how brand drugs that launch with high list prices — which take into account the research and development that went into the drug — eventually become affordable once generics are allowed on the market.
What they're saying: A representative for Teva told Reuters that the company plans to fight the lawsuit: “Teva continues to review the issue internally and has not engaged in any conduct that would lead to civil or criminal liability.”
Go deeper: Why the spotlight on generic drug prices is getting brighter