44 states join lawsuit to demand drug manufacturers conspire to keep generic prices on the rise

Connecticut Attorney General William Tong has a skin disease called rosacea. He states that he takes an antibiotic, doxycycline, once a day.

In 2013, the average price of doxycycline on the market went from $ 20 to $ 1,829 a year later. This is an increase of over 8,000%.

In a new lawsuit, Tong alleges that this type of price hike is part of a conspiracy to set prices across the industry.

The lawsuit is a huge one – at least 43 states have filed lawsuits against 20 companies and the document is over 500 pages long. It was filed Friday before the US District Court of Connecticut.

The lawsuit alleges that sometimes a company would decide to raise the prices of a particular drug and others would follow. Other times, companies would agree to divide the market, rather than compete with their market share by lowering their prices.

He says that these kinds of activities have been practiced for years and that companies would avoid creating evidence by entering into these agreements during golf outings or "girls night outings" or SMS.

In several examples, the prosecution quotes call logs between executives of different companies, showing a series of phone calls just before several companies raise their prices at the same time.

All of this, according to the lawsuit, resulted in "several billion dollars of damage to the national economy".

Consumers do not always notice that the price of a generic drug is increasing rapidly. People without insurance naturally pay the full price, but even people with insurance can feel the effects.

"More than ever, people pay according to the price of drugs," says Stacie Dusetzina, a professor at Vanderbilt University, who studies the price of drugs. Patients often have to meet a deductible before their health care coverage comes into play. Thus, they pay the full price until they reach a certain level of expenditure, or they pay a percentage. the price of the drug – this is called co-insurance.

Surveys show that more and more Americans are having trouble paying medical bills at the expense The average annual deductible in employment-related health plans has quadrupled in the last 12 years and is now averages $ 1,300.

But, adds Dusetzina, even if you only pay a modest copayment, such as $ 5 per prescription, if your insurance company pays more for drugs, it may increase the premiums in your plan. next year. "In the end, these costs are borne by the consumer," she says.

According to Dusetzina, this lawsuit is "very disappointing" – a situation in which consumers endure the high price of brand-name drugs because of the implicit promise that a generic comes one day and will eventually lower the price.

But this result does not happen automatically – it relies on healthy competition and market forces. If only one generic version is available, the drug manufacturer can set the price at about the same level as the brand name.

"The higher the number of competitors, the more we see price reductions compared to the price of the brand name drug," she says. "So, the magic number seems to be around four manufacturers."

And that assumes that these drug makers do not talk to each other and do not agree to coordinate rather than compete with each other.

The main drug manufacturer cited in the complaint is Teva, an Israeli company. In a statement, Kelley Dougherty, vice president of communications and branding, Teva North America, told NPR that the company was reviewing the allegations internally and that Teva "had not committed any behavior that could result in liability. civil or criminal law ".

The company also asserted that there was nothing new here, and it is true that the new lawsuit is similar to the past lawsuits, though no disagreements they include as many states as plaintiffs.

Connecticut Attorney General William Tong pointed out that the investigation was ongoing and that, given the political will to reduce the price of drugs, many lawsuits would still be initiated.