CVS Health and Rite Aid joined other pharmacy chains Monday in a lawsuit accusing three drugmakers of squeezing out generic competitors to protect their sales of a diabetes medication, resulting in $2.8 billion in excessive spending.
The lawsuit details a series of events that allegedly impeded competitors via notorious "patent games" that policymakers aim to ban. The pharmacy chains allege Assertio Therapeutics paid Lupin Pharmaceuticals to delay its generic version of Glumetza, the extended-release iteration of a drug that has been used to treat Type 2 diabetes since 2002. While Lupin's generic could have entered the market in 2009, the companies settled a related patent lawsuit and kept the competition at bay until 2016.
The two companies cornered the Glumetza market for several years and reaped billions in profits, the lawsuit alleges. Bausch Health, formerly known as Valeant Pharmaceuticals, was named as a defendant because one of its predecessors was Assertio's marketing partner that allegedly helped prevent other generics from being sold before Lupin's drug entered the market.
"That market-allocation agreement is blatantly unlawful under federal antitrust law," the complaint reads.
From 2012 to 2015, Assertio raised Glumetza prices by more than 40%, according to the lawsuit. Then-Valeant would ultimately purchase the business that housed Glumetza for $14.5 billion.
Valeant raised the price an additional 750% over a four-month span, skyrocketing the price of a 30-day supply from $350 to more than $3,000 and netting Valeant more than $800 million over half a year, according to the lawsuit.
Lupin allegedly sold a 30-day supply of generic Glumetza for more than $2,200, yielding the company more than $650 million in profits in 2016 alone.
Pay-for-delay tactics and other competition-stifling strategies have been in the crosshairs of lawmakers as prescription drug costs surge. Patients ration or altogether skip medication like insulin, which has risen by 600% over the past 15 years, spiking healthcare costs at the expense of patients' health.
The Trump administration moved forward with two regulatory actions Wednesday that would allow states and drugmakers to import prescription drugs. Although, the proposal excludes many of the most expensive drugs, including injectables like insulin and biologics. U.S. drug prices, excluding rebates, are often twice as much as the same drugs sold abroad, according to a new report from the Health Care Cost Institute.
Lawmakers have proposed bills that would allow the government to negotiate drug prices with manufacturers, force drugmakers to pay back Medicare for price hikes above inflation and cap out-of-pocket costs for seniors, among other provisions.
A proposed budget deal includes the Creating and Restoring Equal Access to Equivalent Samples Act of 2019, or Creates Act, which would stop branded drugmakers from blocking generic manufacturers by withholding samples. The Congressional Budget Office estimated that the Creates Act would save the federal government $3.9 billion over 10 years.
This spring, attorneys general from more than 40 states filed a federal lawsuit in May against drug manufacturers for artificially inflating generic-drug prices. The insurer Humana filed a similar lawsuit in October, alleging generic drugmakers fixed, increased or maintained the prices of more than 100 generic drugs.