FTC: Files Unprecedented $120 Million Suit Against Mylan
Federal regulators will file charges today alleging that the nation's second-largest generic drug maker restrained trade by cornering the market on raw materials for two anti-anxiety drugs and raising their prices more than 30-fold (see AHL 3/5). Pittsburgh-based Mylan Laboratories Inc. also faces "legal complaints from 10 states" and is the target of "class-action lawsuits filed in Florida and California on behalf of consumers who bought certain Mylan drugs in the past year." The Pittsburgh Post-Gazette reports that in seeking $120 million in penalties, the FTC outlined a conspiracy by which Mylan and its raw-materials supplier and distributor "obtain[ed] monopoly power in the generic lorazepam and clorazepate tablets market" (Lindeman, 12/22). The Wall Street Journal reports that Profarmaco SRL of Milan, a subsidiary of Cambrex Corp. of East Rutherford, NJ, signed an exclusive deal with Mylan to supply the raw materials for the two drugs. Cambrex's distributor, Gyma Laboratories of America Inc., was also named in the suit (Perine/Burton, 12/22). The FTC said that after it signed the deal with Profarmaco, Mylan raised the price of 500 tablets of clorazepate from $11.36 to $377, and lorazepam from $7.30 to $190. The drastic increases spurred consumer complaints and drew the attention of several legislators, who pushed the FTC for action (see AHL 3/5).
New Tack For FTC
The FTC is pursuing a relatively new strategy in attempting to recoup money from Mylan, which has categorically denied all charges. The New York Times reports that the "agency often seeks injunctions requiring violators of the antitrust laws to halt their illegal conduct, but it has rarely tried to force companies to surrender what the [FTC] regards as ill-gotten gains" (Pear, 12/22). The Washington Post reports that the agency, by seeking to "expand its powers to punish alleged antitrust violators" is "certain to raise eyebrows in Congress and alarm some executives." Sources say "the newly activist agency has hunted for an eye-catching and strong enough case to justify a request for 'disgorgement,'" or the reimbursement of illegally-gained profits. The FTC said that if it is successful in recouping the $120 million, it will go to those who originally paid it, which in many cases means the "bulk of any settlement could ... wind up in the government's coffers or those of health care companies" (Segal, 12/22).
Senate Special Committee on Aging Chair Chuck Grassley (R-IA), one of the legislators who passed consumer complaints against Mylan on to the FTC in May, said in a release: "Older Americans are alarmed at the dramatic price increases of the medications they depend on for their good health. I'm pleased to see the Federal Trade Commission take action to preserve competition in the generic drug market. In the pharmaceutical industry, as in all industries, more competition means lower prices and better products for consumers" (committee release, 12/21). Click here for previous coverage of Mylan.