Tag Archives: Abuse of Market Power

Humana files suit against 37 drug makers accusing them of price fixing

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https://www.healthcarefinancenews.com/news/humana-files-suit-against-37-drug-makers-accusing-them-price-fixing?mkt_tok=eyJpIjoiWlROaE56WXlNV1JrTlRRNSIsInQiOiJtQUlRODhrK2xUNW00em4rcUIyWEg0enJuVFBPXC9DUEl0VGhLTWNNUHFwcmdCMG5FTm9cLzNPbzQ4Sm5pR1hcL1wvSzBvNmU2Z0RFVGloQlBpU0Z4bnFhZmFEWnJUWXVmdHZcL3V1UEd0dzB5MFF5XC96OTNHWUpPVkpyaVRDRTRPaTYraSJ9

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The conspiracy involving secret meetings resulted in higher prices for insurers, the government and consumers, the lawsuit claims.

Humana has brought a lawsuit against 37 pharmaceutical companies including Novartis, Mylan and Teva, alleging price fixing for numerous generic drugs.

The conspiracy increased the profits of the drug makers and others working with them at the expense of consumers, the government and private payers such as Humana, the lawsuit said.

Humana wants to recover damages it said it incurred from overcharges for certain widely-used generics, according to the lawsuit filed Friday in federal court for the Eastern Division of Pennsylvania.

Humana said the conspiracy is far-reaching among the drug makers to manipulate markets and obstruct generic competition. They agreed to fix, increase, stabilize and/or maintain the price of the drugs specified, along with other drugs, the court document said.

Humana accuses the pharmaceutical companies of secret meetings and communications at public and private events such as trade association meetings held by the Generic Pharmaceutical Association and others.

Humana’s allegations are based on personal knowledge and information made public during ongoing government investigations, the insurer said.

The pricing fixing is also under investigation by federal and state authorities, the lawsuit said.

The Attorneys General of 47 states, Washington, D.C. and Puerto Rico have filed a civil enforcement action against most of the named defendants, alleging agreements to fix 15 drug prices, the lawsuit said.

The Department of Justice has convened a grand jury to investigate a number of the defendants for price increases ranging from 100 percent to 400, 2,600 and 8,000 percent, Humana said.

The price increases are consistent with Medicare Part D price increases found by the Government Accountability Office for many of the subject drugs.

Among the drugs for which GAO identified “extraordinary price increases” — defined as a price increase of 100 percent or more — between the first quarter of 2011 and the first quarter of 2015, are, according to Humana, Amitriptyline, an antidepressant; Baclofen, a muscle relaxant and anti-spastic agent; Benazepril, an ACE inhibitor to treat hypertension; Clobetasol, a steroid and anti-inflammatory agent;  Clomipramine, an antidepressant for obsessive compulsive disorder; Digoxin, used to treat heart failure and atrial fibrillation; Divalproex for seizure disorders; Doxycycline (in Hyclate form) an antibiotic; Leflunomide for rheumatoid arthritis; Levothyroxine, a thyroid drug to treat hypothyroidism; Lidocaine, an anesthetic;  Nystatin, an antifungal for skin infections; Pravastatin to lower cholesterol; Propranolol, a beta blocker to treat hypertension; Ursodiol, to decrease the amount of cholesterol produced by the liver; and Verapamil, to treat hypertension, angina and certain heart rhythm disorders.

 

Sutter Health destroyed 192 boxes of evidence in antitrust case, judge says

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https://www.healthcaredive.com/news/sutter-health-destroyed-192-boxes-of-evidence-in-antitrust-case-judge-says/511300/

Dive Brief:

  • A California superior court judge ruled that Sutter Health intentionally destroyed 192 boxes of documents that were involved in a lawsuit involving employers and labor unions that alleged the health system abused its market power and charged inflated prices, reported California Healthline.
  • The United Food and Commercial Workers and its Employers Benefit Trust initially filed the case in 2014 alleging that Sutter Health required health plans to include all Sutter hospitals in networks.
  • San Francisco County Superior Court Judge Curtis E.A. Karnow said that Sutter knew the evidence “was relevant to antitrust issues” and the company was “grossly reckless.” A Sutter spokeswoman told California Healthline that the incident was a “mistake made as part of a routine destruction of old paper records.”

Dive Insight:

The recent ruling doesn’t put Sutter Health in a great light. The nonprofit system of 24 hospitals based in Sacramento reportedly destroyed documents related to the case —  and its actions miffed the judge in the case.

Of course, this issue goes beyond destroying records, Sutter Health and California. The case involves a growing health system that allegedly increased prices to employers and employees while gaining a larger market foothold.

Mergers and acquisitions continue to become a common way for health systems to reduce costs, resolve inefficiencies and gain a larger market share. However, having one system own a large part of the healthcare market also inflates healthcare prices. Brent Fulton, assistant adjunct professor at Petris Center in the School of Public Health, University of California, Berkeley, recently wrote in a Health Affairs article “reviews of studies of hospital markets have found that concentrated markets are associated with higher hospital prices, with price increases often exceeding 20% when mergers occur in such markets.”

Sutter Health holds more than 45% of the healthcare market share in six Northern California counties. That gives the system leverage over employers. If employers don’t come to an agreement with Sutter Health, employees have limited options in those counties. Sutter Health charges about 25% higher than other California hospitals, according to the University of Southern California.

Those costs are higher if that care is considered out-of-network. Last year, Sutter Health allegedly asked employers to waive their rights to sue and to agree to arbitration following a court ruling that employers and health plans can seek class-action status in a lawsuit pertaining overcharges against Sutter Health. Those who didn’t agree were threatened to lose access to discounted in-network prices and pay higher out-of-network costs.

The court filing states the parties should not expect further orders in the case until after mid-December. Industry experts are awaiting the results as the trend of M&A continues and stakeholders question who the activity is benefiting: the companies or the patient?