Drug Price-Fixing Charges Result From Investigation of Generic Drug Industry

Two former executives at a generic pharmaceutical company have been charged with being involved with price-fixing, bid-rigging, and customer allocation conspiracies. The charges, brought by the Department of Justice (DOJ) Antitrust Division, are the first that have resulted from a 2-year investigation of the generic drug industry.

The 2 individuals are both former senior executives of Heritage Pharmaceuticals: former CEO Jeffrey Glazer and former President Jason Malek. They were both charged with 2 counts of conspiring with other unidentified drug makers to fix prices of glyburide, which treats diabetes, and doxycycline hyclate, an antibiotic.

“Millions of Americans rely on prescription medications to treat acute and chronic health conditions,” Deputy Assistant Attorney General Brent Snyder of the DOJ’s Antitrust Division said in a statement. “By entering into unlawful agreements to fix prices and allocate customers, these two executives sought to enrich themselves at the expense of sick and vulnerable individuals who rely upon access to generic pharmaceuticals as a more affordable alternative to brand-name medicines.

According to the court documents, the doxycycline hyclate conspiracy took place from April 2013 to December 2015, and the glyburide conspiracy took place from April 2014 to December 2015.

“Conspiring to fix prices on widely used generic medications skews the market, flouts common decency—and very clearly breaks the law,” said Special Agent in Charge Michael Harpster of the FBI’s Philadelphia Division.

Bloomberg reported that Glazer and Malek are expected to plead guilty during their January 9 court appearance. The men were fired from Heritage in August and the company has filed its own civil lawsuit against them for allegedly stealing millions of dollars from the company, The Wall Street Journal reported.

In October 2014, Senator Bernie Sanders (I-VT) and Representative Elijah E. Cummings (D-MD) brought attention to Heritage when they called on the Obama administration to act on the “staggering increases” in generic drug prices. In a letter to HHS Secretary Sylvia Burwell, Sanders and Cummings cited examples, such as doxycycline hyclate, which had skyrocketed from $20 a bottle in October 2013 to $1849 in April 2014.

“Historically, generic drugs have helped make medications affordable for millions of Americans, and they have resulted in huge savings for consumers and taxpayers,” Sanders and Cummings wrote. “However, recent cost increases are now preventing some patients from getting the drugs they need, and we need to understand what factors are driving these price spikes.”

They also sent letters to 14 generic pharmaceutical manufacturers, asking them to explain why prices had risen so dramatically in such a short time.