Drugmakers under fire for possible US price fixing
Two prominent U.S. lawmakers called on federal antitrust regulators 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.
The request by U.S. Senator Bernie Sanders and Representative Elijah Cummings follows a similar letter they sent last fall calling for an investigation into 14 drug companies over price increases of generic drugs.
U.S. prosecutors could file the first charges by the end of the year in their subsequent criminal investigation of generic drugmakers over suspected price collusion, Bloomberg reported on Thursday. A Justice Department spokesman declined to comment.
In their latest letter to the Justice Department and Federal Trade Commission, Sanders, an independent, and Cummings, a Democrat, raised questions about skyrocketing prices for insulin, and included a chart showing that many of the price spikes appeared to occur in tandem.
They noted that the original patent on insulin, a hormone used by diabetics to control blood sugar levels, expired 75 years ago.
Sanofi spokeswoman Ashleigh Koss said in an emailed statement that "Sanofi sets the prices of our treatments independently."
Novo Nordisk also said it sets prices "independently" and said it stands by its business practices. A spokeswoman for Merck said the company does not make insulin.
Merck makes other products to treat diabetes.
Eli Lilly, in an email, said it strongly disagrees with the accusations in the letter. "The insulin market in the U.S. is highly competitive," the pharmaceutical company said.
Shares of several generic drugmakers fell on Thursday after the report of pending Justice Department charges. Mylan N.V. closed down 6.9 percent, Allergan Plc fell 4.5 percent and Endo International Plc dropped 19.5 percent. Teva Pharmaceuticals Inc Ltd, which recently acquired Allergan's generics business, fell 9.5 percent.
"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.
Several generic drugmakers, including Mylan, Allergan, Endo and Taro Pharmaceutical Industries Ltd, had previously disclosed that they were subpoenaed in connection with the antitrust investigation by the Justice Department. Bloomberg said the probe spans more than a dozen companies and about two dozen drugs, citing people familiar with the matter.
Impax Laboratories Inc said earlier this year that 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.
A spokesman from Teva said the company "is not aware of any facts that would give rise to an exposure to the company with respect to these subpoenas."
Officials at Endo and Lannett Company Inc did not immediately respond to requests for comment.
Aggressive drug pricing has come under intense scrutiny after Democratic presidential candidate Hillary Clinton tweeted her intent to tackle high prices last year.
An August report from the Government Accountability Office found that 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.
In February, Sanders and Cummings asked the U.S. Department of Health and Human Services' enforcement arm to investigate generic drug price increases.
Recent price hikes that have drawn fire included Turing Pharmaceuticals' decision in 2015 to raise by 5,000 percent the price of a decades-old treatment for a dangerous parasitic infection.
Generic drugmakers, possibly reacting to the political headwinds, reined in price hikes this year.
Guggenheim Securities, citing polling of generic drugmakers, last month estimated that overall U.S. generic drug prices would dip by a percentage in the mid-single digits this year.
The price erosion has been felt by drug wholesalers like McKesson Corp and Amerisource Bergen Corp, which rely on price fluctuations for part of their profit margins.