Act Liability for Generic Drug Price Fixing
According to the US Department of Justice, Apotex Corporation, among other drug manufacturers, paid more than $400 to settle False Claims Act violations, which included increasing and maintaining high prices for generic drugs (Office of Public Affairs, 2021). Apotex raised the price of its generic drug, pravastatin, while also entering into price-fixing agreements with suppliers to reduce competition. However, the high prices increased the risk of patients being denied access to the drugs. Apotex agreed to a $49 million out-of-court settlement with the State of Texas for conspiring to raise and maintain pravastatin prices.
The report is an example of Medicaid fraud because it involves a drug manufacturer conspiring through kickback schemes to raise and maintain high generic drug prices, ensuring guaranteed higher Medicaid returns with little competition. According to Gunasekera and Brooker (2021), the three companies, Apotex, Taro Pharmaceuticals, and Sandoz, paid each other in kickbacks to trade insider information to maintain control over the supply of generic drugs. The fraudulent activity is visible in the companies’ decisions to raise the price of generic drugs following illegal competitive schemes that prevented other drug manufacturers from supplying Medicaid programs. Furthermore, the companies secretly paid kickbacks to each other for insider information that eliminated competition from Medicaid programs.
In conclusion, Apotex’s and the other companies’ activities are not abuse but a fraud. The aspect of fraud in this scenario involves an illegal scheme to control the supply of drugs to Medicaid at a higher price while eliminating competition. Furthermore, the activities resulted in Medicaid paying more than average for generic drugs for several years.
E. Gunasekera and R. Brooker (2021). There is nothing generic about generic pharmaceutical fraud. 1. National Law Review, 11(278).
Public Affairs Office (2021). Pharmaceutical companies have paid more than $400 million to settle allegations of false claims act liability for generic drug price fixing. The Department of Justice of the United States. Web.