December 18, 2018

Warren Calls for Investigation into Alleged Price Fixing Schemes by Generic Drug Manufacturers

Letter Follows Allegations of Manufacturers’ Anti-Competitive Behavior Described as “Most Likely the Largest Cartel in the History of the United States”

Warren Legislation to Promote Competition in the Generic Market Would Address Price Hikes, Market Failures 

Text of the Letter (PDF) 

Washington, DC ­- United States Senators Elizabeth Warren (D-Mass.) today sent a letter to Republican leaders of three Senate committees with jurisdiction over drug pricing issues—Health, Education, Labor, and Pensions (HELP) Committee Chairman Lamar Alexander (R-Tenn.), Finance Committee Chairman-designate Chuck Grassley (R-Iowa), and Judiciary Committee Chairman-designate Lindsey Graham (R-S.C.)—calling for them to open investigations and hold hearings on allegations of price fixing behavior by generic drug manufacturers.

The letter comes after reports in the Washington Post about allegations of price-fixing activities by generic drug manufacturers that one expert described as “most likely the largest cartel in the history of the United States.” According to these reports, “What started as an antitrust lawsuit brought by states over just two drugs in 2016 has exploded into an investigation of alleged price-fixing involving at least 16 companies and 300 drugs.”

These allegations, if true, may help explain the numerous and increasingly troubling reports in recent years of rapid and unexplained price increases for generic drugs.  While generic drugs have helped dramatically curbed healthcare expenditures, and are generally significantly less expensive than their branded counterparts, reported price spikes of 600%, 1000%, or more are profoundly troubling, and cause immense harm to patients in need. 

The GAO in 2016 reported that over 300 generic drugs sold under the Medicare Part D program had at least one “extraordinary” price spike of over 100% in the five-year period from 2010-2015.

But evidence also suggests that generic drug markets are plagued by anti-consumer behavior and anti-competitive features that go far beyond high-profile price hikes of individual products. The industry is characterized by substantial consolidation: forty percent of generic drugs are now made by only one company, and the majority are made by one or two companies.

“If the allegations of price-fixing are true, they affect millions of Americans who purchase prescription drugs. The investigation should include the impact of such behavior on the Medicare and Medicaid programs, the Affordable Care Act, and the private health insurance market, as well as potential shortcomings in antitrust law and antitrust enforcement, and in the laws governing generic and biosimilar drug competition,” wrote Senator Warren. “All of these issues are within your Committees jurisdiction, and Congress has a responsibility to investigate these concerns and legislate if necessary.”

A member of the Senate Health, Education, Labor, and Pensions Committee, Senator Warren has been a leading voice in Washington calling for lower prescription drug prices since joining the Senate in 2013.

In July 2018, she introduced the Capping Prescription Costs Act, a bill that tackles high drug costs faced by families placing a monthly cap on their out-of-pocket drug costs. The legislation caps prescription drug copays at $250 per month for individuals and $500 per month for families. The bill, which applies to all group health plans and individual market plans, ensures that individuals and families with high prescription drug costs are protected and can access their necessary medications.

She is also the lead sponsor of the Affordable Drug Manufacturing Act, a bill to authorize the government to manufacture certain generic drugs at lower costs or contract with manufacturers to produce the drugs at competitive prices.