United States: Public Outcry Over Generic Price Hikes Spurs Criminal Investigations

Drug manufacturers Impax Laboratories and Lannett Company have come under public scrutiny and, more recently, criminal investigation for their recent generic drug price increases. The companies disclosed in recent SEC filings that the U.S. Department of Justice has issued grand jury subpoenas to Impax and Lannett employees seeking information related to their communications with competitors concerning "the sale of generic prescription medications."

Although the companies' public filings provide no details about the nature of the federal investigations, there is reason to believe that the criminal probe seeks information related to digoxin, which is a heart medication principally manufactured by Impax and Lannett. On July 8, The New York Times  published an article questioning digoxin's recent and unexplained price hikes. According to The NYT, prices for digoxin tripled for many patients between October 2013 and June 2014. The article also mentioned that, in February 2014, Lannett's CEO had reported that the company's sales had increased 84% year on year.

A week after The NYT's publication, the State of Connecticut Attorney General's Office served subpoenas and interrogatories on Impax and Lannett that sought information related to digoxin. Media outlets have reported that the Connecticut Attorney General's Office is investigating whether there was an agreement to fix digoxin's prices or an agreement to divide customers or territories in violation of Connecticut antitrust law.

But will the criminal probe end with Impax and Lannett? Maybe not. In early October, U.S. Senator Bernie Sanders (I-Vt.) and U.S. Representative Elijah E. Cummings (D-Md.) wrote letters to fourteen generic drug manufacturers announcing that they were investigating the "staggering increases for generic drugs." The recipients of the Congressional inquiry letters are identified here.

The Congressional investigation has recently expanded beyond letters. This week, the Senate healthcare subcommittee will be holding a hearing to continue its investigation. According to a Congressional press release, the hearing seeks "to explore why the costs of certain generic drugs are skyrocketing."

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