Senate Hearing Investigates Generic Drug Prices

Soon after the US Department of Justice issued subpoenas to representatives from 2 generic drug manufactures, a Senate subcommittee announced the date of a hearing on soaring generic drug prices.

The Securities and Exchange Commission issued subpoenas to Lannett Company, Inc, and Impax Laboratories, Inc, on November 3, 2014, regarding investigations into antitrust law violations and generic drug pricing.

The Impax Laboratories subpoena, issued to a sales representative, requests any communication with competitors or competitors’ employees regarding generic prescription medication sales. The company will need to produce any relevant documents or communications, and give testimony before the Eastern District of Pennsylvania’s grand jury.

The Lannett Company, Inc, subpoena covers 2 specific areas related to antitrust laws and generic drug pricing. The first portion covers a Connecticut Attorney General investigation into whether the company or its employees engaged in price fixing, maintaining, or controlling for digoxin. The second portion serves the company’s senior vice president of sales and marketing with a grand jury subpoena pertaining to Sherman antitrust act violations in the generic drug industry. That subpoena requests any documents exchanged with competitors related to the sale of any generic prescription medications during any time period.

The company denies allegations of inappropriate acts, the SEC filings state.

Prices for a variety of common prescription generic drugs increased exponentially this year, with some generic drug prices increasing more than 100%, or even 1000%, a Drug Channels Institute report found. The soaring prices and lagging reimbursement rates have stymied independent pharmacists specifically, because they must either dispense the drugs at a loss or pass the higher costs along to patients.

A National Community Pharmacists’ Association (NCPA) survey conducted earlier this year found that generic drug prices increased very rapidly, much more rapidly than the relatively flat generic drug reimbursement rates.

The increased prices force certain patients into Medicare drug plan coverage gaps sooner and cause other patients to forego medications, the NCPA said.

The costs prompted US Senator Bernie Sanders (I-Vermont) and Representative Elijah Cummings (D-Maryland) to announce a congressional investigation in October. The first hearing occurred on November 20.

Prior to the hearing, Sen. Sanders and Rep. Cummings, who are on the Senate health care subcommittee and the House oversight committee, sent letters to 14 drug manufacturers outlining their concerns.

“We launched this investigation because prices for generic drugs are skyrocketing, preventing many Americans from purchasing the critical medications they need,” Rep. Cummings said in a press release. “I applaud the Department of Justice for also looking into the root causes of these huge increases, so that every American has access to the medications they need.”

The hearing took place as part of the Senate subcommittee on Primary Health and Aging, which is part of the Senate Committee on Health, Education, Labor, and Pensions.

“We’ve got to get to the bottom of these enormous price increases,” Sen. Sanders said. “It is unacceptable that Americans pay, by far, the highest prices in the world for prescription drugs. Generic drugs were meant to help make medications affordable for the millions of Americans who rely on prescriptions to manage their health needs, and now some of them are becoming unaffordable.”