Finally, the Obama Justice Department is getting something right.
As reported by Zero Hedge, stocks for generic drug makers began to collapse in recent days, after news broke that the Justice Department’s investigation into collusion and dramatic price increases will result in the first charges being brought by the end of this year.
Other news reports noted that prosecutors have begun to close in on generic Big Pharma companies, following a sweeping criminal investigation into what is believed to be massive drug price collusion. It’s the latest assault against an industry that has been hard hit in recent years, after public outrage over the dramatic price increases of some medications, including a few that have been on the market for decades.
As further noted by Bloomberg Markets, the antitrust investigation began about two years ago, and has grown to involve more than a dozen companies and two dozen different drugs, according to people who are familiar with the investigation.
A grand jury is determining whether some Big Pharma executives may have agreed with each other to simultaneously raise drug prices.
Stock prices plunge
Although some of the companies have made various disclosures related to the probe, they have only acknowledged a few drugs that are under scrutiny, including an antibiotic and a heart treatment. Bloomberg lists some of the companies under investigation:
“Mylan NV and Teva Pharmaceutical Industries Ltd. Other companies include Actavis, which Teva bought from Allergan Plc in August, Lannett Co., Impax Laboratories Inc., Covis Pharma Holdings Sarl, Sun Pharmaceutical Industries Ltd., Mayne Pharma Group Ltd., Endo International Plc’s subsidiary Par Pharmaceutical Holdings and Taro Pharmaceutical Industries Ltd.”
Every company involved in the probe is cooperating with Justice Department prosecutors except for Covis, whose officials said last year they were not able to assess the outcome of the investigation. Other companies, including Teva, have denied they are involved in any scheme to fix drug prices.
Upon hearing the news, shares of all the companies that have been named in the investigation fell.
Lannett dropped 27 percent to close at $17.25 in New York trading. Impax fell 20 percent to $16.50. Endo fell by 19 percent to $14.63, while Teva slid 9.5 percent to $39.20, Allergan declined by 4.6 percent to $188.82, and Mylan dropped 6.9 percent to $34.14. Shares of Concordia International Corp., which Bloomberg reports have bought most of Covis’s assets, declined 5.6 percent to 4.37 Canadian dollars. Taro shares fell 7.3 percent to $93.68.
Americans are fed up with Obamacare and high drug prices
Americans, by and large, are not fans of Obamacare and are tired of seeing their premiums and out-of-pocket expenses like deductibles continue to rise. And they are extremely fed up with Big Pharma continually raising prices for common drugs that have long been generic.
For instance, the country was shocked when former hedge fund manager Martin Shkreli touched off a firestorm of protest when he acquired an old anti-parasitic drug and then raised its price from $13.50 per tablet to an eye-popping $750 each.
Also, Pharmaceuticals International Inc. was heavily criticized by Congress after jacking up prices of many older drugs. And in September, House members grilled Mylan Chief Executive Officer Heather Bresch over her company’s sixfold price increase since 2007 to $600 for a pair of EpiPen allergy shots.
Though up to now attention has largely been focused on brand-name drugs, which are traditionally more pricey, the Justice Department investigation is now targeting generic medications as well.
It’s not illegal for drug companies to raise prices at the same time. However, it is unlawful for competitors to get together and agree to set prices on discounts, fees or production quotas that have an effect on prices.
Sources told Bloomberg that criminal charges could be leveled at some high-level executives.