Conn. attorney general calls generic drug makers a 'private sector cartel'



AMNA NAWAZ: The price of prescription drugs
is a pocketbook issue that affects Americans from every walk of life. Much of the focus has been on the cost of
brand-name drugs. But, as John Yang tells us, a new multistate
lawsuit alleges many generic drugmakers have been artificially raising the price of their
medications, drugs used to treat everything from minor infections to chronic diseases
like HIV. JOHN YANG: Amna, about 90 percent of the prescriptions
filled in the United States are for generic drugs, medications whose patents have expired. Congress created the generic drug industry
to drive prices down through increased competition. But a lawsuit filed by 43 states and Puerto
Rico alleges that leading drugmakers conspired to inflate the prices of more than 100 widely
used generic drugs, sometimes by as much as 1000 percent. Connecticut Attorney General William Tong's
office has been leading the investigation. And he joins us now. Mr. Tong, thanks so much for joining us. WILLIAM TONG, Connecticut Attorney General:
John, thanks for having me. JOHN YANG: First of all, give us a sense of
the scope. How much money are we talking about? WILLIAM TONG: Billions of dollars. We think this is potentially the largest private
sector cartel in history. And what we're seeing is pervasive, widespread,
industry-wide price-fixing and dividing up of market share. JOHN YANG: And you're alleging that some of
the drugs involved are widely used. Some of our viewers may have them in their
medicine cabinets right now. WILLIAM TONG: Yes. JOHN YANG: What are we talking about? WILLIAM TONG: So, common antibiotics like
doxycycline, which I use day, Z-Packs, which we use — I use sometimes when my kids are
sick. I have a 13-year-old, a 10-year-old, a 7-year-old. Adults use Z-Packs for bronchitis and a host
of ailments. There are some simple antibiotic creams that
we use, you know, when we get a cut or a scratch. These are drugs that we use every day and
they're drugs at Americans rely on to live. JOHN YANG: And what's the evidence you have
to backup your claims? WILLIAM TONG: So, we have text messages, e-mails. We have cooperating witnesses. And we also have phone records that show on
days in which the major generic drug manufacturers increased prices, often in concert, there
is a high frequency of phone calls, you know, phone calls that last for a minute, two minutes,
five minutes, 45 minutes, between the major generic drug manufacture centers a highly
unusual way. And so all of this evidence shows that there
was overt, brazen collusion on price. And I guess what I would say to the industry
is, what part of that is not true? JOHN YANG: Well, I mean, to be clear, you
don't know what was said in those phone conversations. You just know that they took place. So what makes you suspicious? WILLIAM TONG: No, actually, we have text messages
and e-mails that memorialize what happened in those phone conversations. We have chatter after the phone conversations
in which people say, look, I talked to this guy, I talked to that guy. It seems that this company is going the raise
price on this drug, and this other company is going to follow. It's that sort of communication, coupled together,
the text messages, the e-mails, the cooperating witnesses, again, who are telling us what's
happening at these companies, and then the phone records. Putting that all together shows a practice,
an industry-wide practice of collusion, again, in what is the largest corporate cartel in
history. JOHN YANG: We're going to be talking to someone
from the generic drug industry after this. But one of the things that they have said
before in response to this lawsuit is that they say that, overall, the price of generic
drugs has been falling. How do you respond to that? WILLIAM TONG: You know, they sent out a press
release, and they sent out a chart that they say shows that prices have gone down a little
bit over the last three years. But what they don't mention is that the same
chart that they put out shows there was a huge spike in prices in 2012, '13 and '14. And this is why we saw prices go up 1000 percent,
2000 percent on the drug I mentioned, doxycycline, the one I take, 8000 percent. And there was just no reason for a spike in
prices, no market explanation. And what we found is that, during that time,
these competitors were talking and they were colluding. JOHN YANG: You said that some of these texts
memorialize the phone conversations, and they say who they talked to. But what in specific is being said this in
these text messages? WILLIAM TONG: So, what they're talking about
is, you know, efforts by various drug manufacturers to raise prices. So, on the one hand, you see communications
about, you know, Teva, which is the focus of this latest complaint, and the largest
generic drug manufacturer in the world, that Teva will raise prices on X-day, and another
generic drug manufacturer, say, Mylan, will follow. And so there are overt conversations by specific
manufacturers by representatives of specific manufacturers about price movements and how
they are going to react to them. Also, they talk about dividing up their fair
share of the market and forcing a market allocation or division of market share by playing nice
in the sandbox with each other. So it's that kind of language that shows that
there is an overt agreement to collude on price and market share. JOHN YANG: In addition to trying to stop this
practice, is — or trying to stop these practices — is your lawsuit trying to get any other
of this money back for the consumer? WILLIAM TONG: Yes. We're trying to claw back the billions of
dollars that they stole from the American people through what we believe to be one of
the biggest frauds ever committed on the people of this country. JOHN YANG: Connecticut Attorney General William
Tong, thanks so much for joining us. WILLIAM TONG: Thank you, John.

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