“More than a Dozen” Drugmakers under Criminal Investigation for Price-Fixing, Shares Plunge, after Getting Crushed All Year

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Now the drugmakers are struggling with their response.

The digital ink wasn’t dry yesterday on my article on How PE Firms Are Flipping Drugs in Price-Gouging Scheme that Cannibalizes the Entire US Economy, when Bloomberg reported that US prosecutors “are bearing down” on “more than a dozen” drugmakers “in a sweeping criminal investigation into suspected price collusion.”

According to Bloomberg:

The antitrust investigation by the Justice Department, begun about two years ago, now spans more than a dozen companies and about two dozen drugs, according to people familiar with the matter. The grand jury probe is examining whether some executives agreed with one another to raise prices, and the first charges could emerge by the end of the year, they said.

Among the drugmakers that have received subpoenas:

Mylan and Covis who are among our heroes in the prior article. Other companies tangled up in this include Teva Pharmaceutical, Actavis (which Teva bought from Allergan in August), Lannett, Impax Laboratories, Sun Pharmaceutical, Mayne Pharma Group, Endo International’s subsidiary Par Pharmaceutical Holdings, and Taro Pharmaceutical Industries.

“Though individual companies have made various disclosures about the inquiry, they have identified only a handful of drugs under scrutiny, including a heart treatment and an antibiotic,” Bloomberg says. Except for Covis, these companies said they’re “cooperating” with the investigation. Covis said it was unable to assess the outcome of the investigation.

What’s new is the sweeping nature of this grand jury investigation. And now the drugmakers are struggling with their response.

“Teva is not aware of any facts that would give rise to an exposure to the company with respect to these subpoenas,” a Teva spokeswoman told Bloomberg in an e-mail.

“To date, we know of no evidence that Mylan participated in price-fixing,” a Mylan spokeswoman told Bloomberg in an e-mail.

Other companies continue to stonewall, according to Bloomberg:

Mayne continues to cooperate with the Justice Department and believes the investigations will not have a material impact on its future earnings, the company said in a statement on Thursday.

Allergan, Impax, and Sun declined to comment beyond their filings. Representatives of Endo, Covis, Taro and Lannett didn’t respond to requests for comment. A Justice Department spokesman declined to comment.

Shares got crushed on Thursday after the news of the grand jury investigation leaked, though they’re now recovering some ground. Note how these shares have gotten slaughtered since their 52-week highs (in bold):

  • Lannet plunged 27% yesterday and are now edging up 0.3%. But it’s down 61% from its 52-week high.
  • Impax plunged 20% yesterday and at the moment recovered 5.8%. But it’s down 61% from its 52-week high.
  • Endo plunged 19% yesterday and is now up 1.7%. But it’s down 76% from its 52-week high.
  • Teva plunged 9.5% yesterday and is now up 1.9%. But it’s down 40% from its 52-week high.
  • Allergan dropped 4.6% yesterday, now up 1.4%. But it’s down 40% from its 52-week high.
  • Mylan dropped 6.9% yesterday and now is up 3.1%. But it’s down 36% from its 52-week high.
  • Concordia, the Canadian company that bought the assets of Covis, fell 5.6% yesterday. Today, it’s down 0.7%. This is a true hero for its hapless investors. At the beginning of the year, shares were still trading at C$58.75. They’re now down 93% from their 52-week high, at C$4.34.
  • Taro dropped 7.3% yesterday and today is up 1.8%. But it’s down 40% from its 52 week high.
  • Mayne, an Australian drugmaker, plunged 15.4%. It was already Friday in Australia and there was no day left to recover. But at A$1.44, the stock is down 31.7% from its 52-week high and is close to becoming a penny stock.

The ravenous price increases that pharmaceutical companies slap on their medicines are part of the reason the US health care system is eating an ever larger slice of consumer, corporate, and government spending. Private equity firms have figured out how to muscle into that cash flow. Read…  How PE Firms Are Flipping Drugs in Price-Gouging Scheme that Cannibalizes the Entire US Economy



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  56 comments for ““More than a Dozen” Drugmakers under Criminal Investigation for Price-Fixing, Shares Plunge, after Getting Crushed All Year

  1. Humpty Dumpty
    November 4, 2016 at 11:30 am

    The humor here is that anyone sentient believes this ‘investigation’ is anything but a shakedown and a PR collage. Drug prices are fixed by a government/healthcare/insurance nexus as anyone close to the industry recognizes. This investigation is for the little people, the fines to be paid are a shakedown, nothing will change because there is no free marketplace.

    • Petunia
      November 4, 2016 at 12:38 pm

      They will get a fine of a couple of hundred million, nothing to them, and the govt, probable Senator Warren, will go on and on about how they are protecting us from gouging. Where have I seen this before?

      • nick kelly
        November 4, 2016 at 1:23 pm

        OK- where have you seen it before? Note the word ‘criminal’ about the investigation.
        Unlike Canada where jail for white collar crime is unusual and short- the US has jailed lots of folks for years insider trading, etc.
        Have a bunch of CEO’s had criminal convictions and only got fined?
        I will bet that people do go to jail when this is over, and with the announcement, the investigation is likely almost over.
        A few insiders have probably flipped already.

        • Mel
          November 5, 2016 at 9:13 am

          Keep your eyes open, though. According to _Big Money Crime_, by Calavita, Pontell, Tillman, people were given long sentences for what they did in the Texas S&L meltdown, but were then released after serving just fractions of those sentences. Your major point still stands.

      • November 5, 2016 at 1:32 am

        2012 GlaxoSmithKline paid $3 billion for false claims. 2009 Pfizer paid $2.3 billion for false claims (kickbacks). 2013 Johnson & Johnson paid $2.2 billion for false claims (kickbacks).. None were charged with collusion or price fixing and maybe none of the subpoenaed will be either but this is serious.. If you think it is not then tell the investors that this a time to buy because they sure don’t think so..

        • George McDuffee
          November 5, 2016 at 12:06 pm

          The billion dollar fines are at least something, but I have two questions:

          (1) Where is all this money going; and

          (2) How is it paid? Cash, wire transfer, discount coupons, how? FWIW: filed a FOI request with the Treasury to find out exactly how GMC “repaid” their billions and never got a reply.

      • Oneyedjack
        November 12, 2016 at 8:10 am

        Its past time to set up citizens committee to enforce the letter of the law.Dismiss all corrupt agencies on the take put them in orange jumpsuits

    • walter map
      November 4, 2016 at 1:55 pm

      These prosecutions prove that the government is still answerable to the people, and not yet completely corrupted by corporatists.

      Otherwise there would be no prosecutions at all.

    • Mark out West
      November 4, 2016 at 8:59 pm

      I’m an Aussie and view America’s obsession about their corrupt Medical system with unending amusement.

      Every other advanced country on the planet who has a universal health care system pays at least 25% less for the equivalent services than Americans.

      Americans fly all over the world to get their drugs cheaper and I can say that Aussie Pharma are guaranteed better than anything offered in the US.

      The Aussie Medicare system allows the Government to cap prices for drugs it buys from drug companies and we have a better generic drug regime than America (And most of the rest of the developed world for that matter)

      Americans have the most entrenched myopathy for change of any nation on earth, unless it is to the right so you can blame immigrants for stealing jobs instead of the 0.05%ers who exported them to China & Mexico to help pay for the multi-million dollar bonuses.

      • silverback
        November 12, 2016 at 8:16 am

        Ive read about the trademark of universal healthcare is filthy hospitals and dirty sheets endless lines,patients die waiting.Janitors helping surgeons,No thank you

  2. Tom Kauser
    November 4, 2016 at 11:59 am

    Impairing of the assets!
    Industry consolidation.
    The generics went up too much?
    Feeding on long lines of B.S. and bankers need to generates those fees and such.

  3. NY Geezer
    November 4, 2016 at 12:06 pm

    I am unimpressed by this revelation. If any vigorous prosecution occurs I will be surprised.

    The way everybody, including Congress has been bashing the drug profiteers for years without anyone doing anything to stop them, one would think we need new legislation to curb this kind of abuse. But we don’t. The Sherman Anti Trust Act has been law since 1890.

    • Captain Kurtz
      November 4, 2016 at 12:16 pm

      In part because it is LEGAL for legislators and their underlings to front run these stocks.

      When the Epipen CEO is the daughter of the Democratic Senator from West Virginia, you know the crony racket is at its apex…..

      And nothing will change.

      • Chicken
        November 4, 2016 at 12:52 pm

        This guy gets it, others here are stubbornly lost pointing the finger at symptoms b/c they just cannot grasp the scam being run by beltway insiders.

        Mandated success.

        • walter map
          November 4, 2016 at 1:31 pm

          Who bankrolls the scam being run by beltway insiders? And how many of those beltway insiders come in through the revolving door paid for by corporate criminals?

          Spin it any way you like, but the problem isn’t “the gubmint”. The problem is corruption of government by corporatists.

      • walter map
        November 4, 2016 at 3:04 pm

        “In part because it is LEGAL for legislators and their underlings to front run these stocks.”

        An interesting claim if true. But can you show that it is true?

        Not that it would make the convicted corporatists any less guilty.

        Don’t you agree?

        • Chicken
          November 4, 2016 at 4:16 pm

          I wish to be a convicted corporatist if it’s definition is any crimes I commit I have an get out of jail free pass for, courtesy the legislators I bought and paid for.

          Who do you think actually pays the fine? hint: Shareholders who weren’t a party to any crimes.

          It’s beyond me why you can’t see through the smoke screen.

        • walter map
          November 4, 2016 at 5:14 pm

          “I wish to be a convicted corporatist if it’s definition is any crimes I commit I have an get out of jail free pass for, courtesy the legislators I bought and paid for.”

          Confession time? Why not just turn yourself in? It would be convenient if you’d bring your evidence.

        • TheBallAlwaysKeepsMoving
          November 5, 2016 at 3:36 pm
  4. walter map
    November 4, 2016 at 12:15 pm

    This daily diary of relentless corporate crime is more than a little depressing. Forgive me if I excuse myself for a while.

    • Chicken
      November 4, 2016 at 12:45 pm

      Corporate crime? I disagree, if you’re willing to pay how is that a crime? Wow, you still don’t get it.

      • walter map
        November 4, 2016 at 1:15 pm

        “Corporate crime? I disagree, if you’re willing to pay how is that a crime? Wow, you still don’t get it.”

        A remarkably dishonest presumption on your part. And a calculated one. No, I am not willing to pay for it, and neither do you speak for me.

        And just because you disagree that its a crime doesn’t mean you can’t be prosecuted for it. It’s all the more egregious to know that your corporate criminality kills people because it denies people the means to save their lives. I call it piracy and murder. You can call it free-market capitalism so long as you can buy off the hangman.

        • Chicken
          November 4, 2016 at 4:08 pm

          The hangman is for sale in this case, that’s the root problem. The symptom is there’s no such thing as ethics in the corporate world, that’s up to legislators to police.

          Unfortunately legislators sold you up the river and you don’t seem to be capable of acknowledging that.

        • walter map
          November 4, 2016 at 4:54 pm

          “The hangman is for sale in this case, that’s the root problem.”

          He’s for sale because you smeared his predecessor who couldn’t be bought and paid to get one who would. The root problem isn’t the hangman, it’s the criminal corporatists who motivate the need for one. You are no less guilty for having escaped execution, and buying in your own hangman only compounds your crimes.

          Corporatists have been waging a campaign of deliberate corruption of the U.S. government since the 1950s in response to the reforms of FDR, but the history of corporate criminality in the U.S. predates the U.S. itself, and it is a brutally ugly one.

          Do you really suppose your goal of replacing what’s left of American democracy with a vicious corporate totalitarianism puts you in the right?

        • Chicken
          November 5, 2016 at 11:34 am

          My point to you is, there’s no such thing as ethics in the corporate world, sorry to break this very basic news to you but that’s the way it is and has always been.

          Look elsewhere for the root causes for your moment of clarity.

  5. Mark
    November 4, 2016 at 12:32 pm

    Following 8 years of corporate doormat Eric Holder, what else would anyone expect from this government?

    A single -payer system like every civilized country has? Forget it!

    We spend about $10,000 per capita on health. Cuba spends about $400.
    Thats 25x difference. Guess which country has a WAY higher infant mortality rate? Guess which country has the same exact life-expectancy as the USA ? Talk about criminal racketeering- just do the math.

    • walter map
      November 4, 2016 at 1:25 pm

      “We spend about $10,000 per capita on health.”

      You spend about $10,000 per capita on lack of health. You pay through the nose even if you get nothing for it.

  6. Bobo
    November 4, 2016 at 12:47 pm

    About 40% of pharmaceuticals sold in the US are made in India. Many drug trials are also outsourced to India. The cost of production of most drugs is negligible, of course discovery can be pricey. The cost of many generic drugs in the US is 10 to 100 times the cost in Mexico or India. In most countries the government sets a maximum price that can be charged for drugs, in Mexico the max is printed right on the box.

    • Lee
      November 4, 2016 at 3:38 pm

      And in Mexico, when I was a a graduate exchange student there, you didn’t need to go to a doctor to get many pharmaceuticals.

      Just go the the pharmacy, tell them what is wrong, and get what you needed.

      Cheap, effective, and no problems.

      • Frederick
        November 5, 2016 at 1:17 am

        Lee My wife is Turkish and Im on her healthcare plan and that is how it works in here unless you want it to be paid for by them then you need a doctors perscription or its an opiod or something dangerous Seems to work better for the patients The US system is set against the little guy like everything else over there Im so glad to be out of there to be honest

  7. George McDuffee
    November 4, 2016 at 12:51 pm

    RICO?

    • walter map
      November 4, 2016 at 1:23 pm

      “RICO?”

      SOP.

  8. Vichy Chicago
    November 4, 2016 at 12:52 pm

    “To date, we know of no evidence that Mylan participated in price-fixing,” a Mylan spokeswoman told Bloomberg in an e-mail.”

    Textbook neither-confirm-nor-deny response. It’s not even a non-denial denial!

    • Chicken
      November 4, 2016 at 1:04 pm

      And we’ll be right back following this brief commercial message brought to you at your expense by your hard-working well paid insider legislators.

      • walter map
        November 4, 2016 at 1:21 pm

        “And we’ll be right back following this brief commercial message brought to you at your expense by your hard-working well paid insider legislators.”

        Owned by corporate racketeers. Candidates should be disqualified who can’t prove their hands are clean of dirty money, but unfortunately corporatists have already paid for your USSC that makes dirty money a requirement for office.

        • mike
          November 4, 2016 at 2:27 pm

          Please buy the stocks while they are down because nothing will change. To me this is a great buying opportunity . Don’t like it but what can I do

        • walter map
          November 4, 2016 at 3:08 pm

          “Please buy the stocks while they are down because nothing will change. To me this is a great buying opportunity .”

          Or maybe this is a great selling opportunity. It is a goodness not to have to cover ones shorts.

        • Chicken
          November 4, 2016 at 4:27 pm

          I agree with Mike, based on past historical records. Stocks are sold, not bought and the three most powerful established marketing tools are:

          Legislation
          Nostalgia
          Fear

        • walter map
          November 4, 2016 at 5:31 pm

          “Stocks are sold, not bought”

          Do tell. Unfortunately for you there’s no “delete” button.

        • Chicken
          November 5, 2016 at 11:45 am

          “Stocks are sold, not bought” Reflect on this, do some basic research if you cannot comprehend.

  9. M.C.
    November 4, 2016 at 3:09 pm

    These generic makers has it coming to them. I remember when the pricing on generics used to be much more affordable. But then came consolidation, Teva was one of the leaders, snapping up companies one after another.

    The idea was to take off patent drugs, and make them cheaper, but that’s not really happening any more. Most of these generic companies do no real R&D, and they profit off of companies that did do the work earlier, and find excuses to jack up pricing. Sure there are middleman effect at work, but the amount they charge is just crazy.

    But fear not, the new wave is coming soon, biosimilars will save the day. Since biotech drugs are much harder to copy, biosimilar is a way for more competition to enter the market, the downside is biosimilar aren’t going to be much cheaper than the drugs they are replacing. The only hope is that increased competition will provide a better path to pricing.

    But not if there is this implicit collusion going on.

    Then there is the fact that the US subsidizes pharma development for the rest of the world. Don’t believe it? Just go look at the 10K of most major pharmas/biotechs. A good part of the revenue, let’s say close to 50% comes from the U.S.

    Let’s face it, if the US suddenly adapted the European style of health care, then a lot of biotechs and pharmas are going to go away either via consolidation or just being unable to justify their existence in the stock market, and who knows what other consequences there will be.

  10. Ptb
    November 4, 2016 at 3:10 pm

    Theater for the masses that are now angry enough to vote for anyone that promises to “drain the swamp”. Even if Trump doesn’t win, I think the corruptocracy that is our government has taken notice that their BS is now being called out by a huge number of voters.

    • walter map
      November 4, 2016 at 4:04 pm

      If Trump becomes president health care costs will be the least of your problems. He combines the worst characteristics of Freddy Krueger and Joffrey Baratheon and is expected to inspire the formation of amateur death squads.

      Not that Attila the Hen is any improvement. Either could gain the distinction of being the first electee impeached and removed without ever having taken the oath.

      • Chicken
        November 4, 2016 at 4:47 pm

        You might ask your psychiatrist about an escitalopram prescription.

        • walter map
          November 4, 2016 at 5:03 pm

          “You might ask your psychiatrist about an escitalopram prescription.”

          Is this the voice of experience? You might like to ask the prison doctor about upping your dose.

      • M.C.
        November 4, 2016 at 6:04 pm

        Yeah, that’s like a doctor saying: “what? You have a toothache? Don’t worry, I have a shotgun. It will definitely help your problem.”

        HRC is part of that corrupt establishment, part of the problem, but Trump is not the solution, he is just a huckster taking advantage. But desperate people do desperate things, and the poor leadership in the country has pushed people into this.

    • Chicken
      November 4, 2016 at 4:51 pm

      Assuming Hillary does win, the triumph will serve to enforce size and scope of habitual fleecings.

      • walter map
        November 4, 2016 at 5:07 pm

        “Assuming Hillary does win, the triumph will serve to enforce size and scope of habitual fleecings.”

        Translation: “We corporatists may have to pay taxes after all.”

        Let the Bush Tax Cuts for the Rich expire. Steps to halt the corporate fleecings require replacing the Republican congress, including the Republicans posing as Democrats.

  11. mike
    November 4, 2016 at 3:19 pm

    PTB- The people don’t run the Gov’t the lobbyist do. The election will pass and the games of Washington will continue. Drugs are big business ( much bigger then most) and nothing will change or at least nothing substantial

  12. Dan Romig
    November 4, 2016 at 3:22 pm

    If I recall correctly, George W and the GOP Congress set up a deal for Big Pharma to be able to sell drugs to Medicare with no price negotiations. I do not know how that plays out currently in this price-fixing criminal investigation, but:

    As sponsored by the 51st Speaker of the House of Representatives, Mr. Serial Child Molester Denny Hastert (so sayeth US District Judge Thomas M. Durkin), HR1 of the 108th Congress went on the books 8 December 2003.

    • Chicken
      November 4, 2016 at 3:57 pm

      Aren’t the Bushes voting for Hillary this election? Pretty sure I read that somewhere….

      • walter map
        November 4, 2016 at 5:11 pm

        “Aren’t the Bushes voting for Hillary this election?”

        Even the neocons are terrified of Trump.

        Your case shows that even hardened corporatists don’t all support HRC.

        • Chicken
          November 5, 2016 at 11:51 am

          Yes, b/c Trump promised to jerk a knot in the corrupted process. Of course the status quo will resists with all their might.

          Plain as the nose on your face.

      • nick kelly
        November 4, 2016 at 6:41 pm

        Not because they want to.

      • Frederick
        November 5, 2016 at 1:20 am

        Yes I read that as well Trump 2016 Talk about an endorsement for the Donald

  13. Oneyedjack
    November 8, 2016 at 6:05 am

    Wikileaks, Clinton, and pay for play, aids drugs, big pharma.Hillary really is a practicing witch

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