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Top domestic pharma companies in US probe for price-fixing – Times of India

MUMBAI: Domestic majors — including Sun Pharma, Lupin and Aurobindo Pharma — along with US biggies Sandoz, Pfizer and Mylan have been charged with price-fixing and collusion on topical dermatology medication in a fresh lawsuit filed in the US.
This joins an earlier US probe charging domestic majors — including Sun Pharma, Dr Reddy’s, Zydus Cadila, Glenmark and Emcure — of a serious price-fixing conspiracy, which is pending with the courts. Under this, several US states had accused major players of a serious price-collusion, widening an earlier lawsuit filed in December 2016 by adding more drugmakers and medicines.
The charges, if proven, may incur huge litigation and financial burden on the companies, experts sid. Others mentioned in the complaint include Mumbai-based companies Wockhardt and Glenmark. The fresh lawsuit, a copy of which is available with TOI, clocks over 500 pages and has been filed on June 10 by over 40 US states. It accuses 26 companies of inflating prices of 80 generic dermatology drugs, with rates spiking by 600% to 2,000% in some cases in 2014 to get a larger market share.

Topical products include any drug that is administered by means of contact, most often with an external body surface, including creams, lotions, gels, ointments and solutions. “Our exposure to dermatology has been less than 5% of the US business and we were relatively late entrants. Apart from this, we can’t comment on a matter that is subject to litigation,” a Lupin spokesperson said. Emails sent to other companies did not elicit a response till the time of going to press.
The development led to a fall in Sun Pharma’s stock by 5% to Rs 474, Wockhardt by 4% to Rs 249, and Glenmark by over 4% to Rs 384, Lupin 1% to Rs 919 and Aurobindo also over 1% to Rs 786 the BSE on Thursday.
The charges are backed by over eight million investigative documents, and more than 300 subpoenas to various telephone carriers with phone calls and text message reports for numerous companies and individuals throughout the generic pharma industry.
The lawsuit says companies consistently and systematically, over a period of several years, engaged in contracts, combinations, and conspiracies that had the effect of unreasonably restraining trade, artificially inflating and maintaining prices, and reducing competition in the generic industry throughout the US.
It adds collusion has been rampant among manufacturers of generic topical products, from at least 2009 through early 2016. Manufacturers of generic topical products typically face higher barriers to entry because technical hurdles associated with demonstrating bioequivalence to branded products are more time-consuming and expensive, and manufacturing costs are high compared to other types of generic drugs.
The greater barriers to entry generally associated with topical products limit the number of competitors in any particular topical product market, creating an environment that is ripe for collusion, it says. Many topical products have only two or three competitors.
As a result, the sales and pricing executives at these companies know each other well and have used those business and personal relationships as a means to collude to limit competition, allocate customers and, significantly, raise prices on dozens of generic topical products.
The larger and more prominent topical manufacturers — including Taro (Sun Pharma’s subsidiary), Perrigo, Fougera (now Sandoz), and Actavis — had long-standing agreements over the course of several years not to compete for each other’s customers and to follow each other’s price increases.
Once the competitors had their “fair share” of a particular drug market, it was time to increase prices.
However, generic drug manufacturers have publicly argued that significant price increases were due to a myriad factors, such as industry consolidation, FDA-mandated plant closures, or elimination of unprofitable generic drug product lines.

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