Mylan Joins Firms Facing DOJ Probe On Price Hikes; Senate Plans Industry-Free Hearing

Senate Special Aging Committee hearing Wednesday to focus on price spikes in off-patent drugs without testimony from drug makers.

The spotlight on drug costs continues to intensify as Mylan NV joins the ranks of generic and branded Rx firms being investigated by the Department of Justice for their pricing practices.

The firm announced in an 8-K filing that it had received a subpoena on Dec. 3 from the antitrust division of the Department of Justice seeking information relating to the marketing, pricing and sale of its antibiotic doxycycline products and any communications with competitors about such products.

Over the last year, both the DOJ and Congress have launched investigations of generic and brand-name firms. In addition to Mylan, the government has subpoenaed Allergan PLC, Lannett Co. Inc., Impax Laboratories Inc. and Par Pharmaceutical Inc. (Also see "Generic Drug Pricing Probe: Allergan Latest Firm Hit With DOJ Subpoena" - Pink Sheet, 17 Aug, 2015.).

The Senate Special Committee on Aging is holding a Dec. 9 hearing on the sudden price spikes in off-patent drugs. The witness list includes representatives from three universities and the Pharmaceutical Care Management Association, which represents pharmacy benefit managers, but no one from the drug industry was invited to testify.

The Committee launched an investigation into high drug prices last month, sending letters to four drug manufacturers – Valeant Pharmaceuticals International Inc., Turing Pharmaceuticals AG, Retrophin Inc. and Rodelis Therapeutics – requesting documents pertaining to price increases for specific products.

The Nov. 4 letters, signed by Chairman Susan Collins, R-Maine, and Ranking Member Claire McCaskill, D-Mo., were among the first bipartisan efforts in the current Congress to investigate how manufacturers are setting prices (Also see "Senate's Bipartisan Rx Pricing Probe Seeks Documents Regarding FDA Regs" - Pink Sheet, 4 Nov, 2015.). Senate Finance committee members Ron Wyden, D-Ore., and Chuck Grassley, R-Iowa, released a report Dec. 1 on Gilead Sciences Inc.'s pricing strategy for its hepatitis C franchise after an 18-month investigation.

Pricing inquiries on the House side so far have been more limited. House Democrats launched an Affordable Drug Pricing Task Force in November, and Democrats on the House Oversight Committee wrote to Chairman Jason Chaffetz, R-UT, claiming that he was blocking an investigation into price increases and asking the committee to subpoena documents from Valeant and Turing.

Mylan, Actavis Doxycycline Prices Rose 8,281%

Sen. Bernie Sanders, I-Vt., and Rep. Elijah Cummings, D-Md., first brought renewed attention to the issue of drug pricing last year. In October 2014, they sent letters to 14 generic drug makers, including Actavis (now Allergan), Apotex Inc., Dr. Reddy's Laboratories Ltd., Mylan, Par and Teva Pharmaceutical Industries Ltd., seeking information about the pricing of their products.

In their letter to Actavis, they asked the company about doxycycline price increases. Citing data from the Healthcare Supply Chain Association (HSCA), they noted that from October 2013 to April 2014, the average price charged for a 500-count bottle of 100 mg tablets had risen from $20 to $1,829, an 8,281% increase.

They cited a similar price increase for Mylan’s version of the drug, noting that the price of a bottle of 500 100 mg tablets had increased during the same period from $20 to $1,849. The Senators also requested information about Mylan’s increased prices for albuterol, benazepril/hydrochlorothiazide, divalproex and pravastatin.

In November 2014, the Senate Health, Education, Labor & Pensions Committee’s Subcommittee on Primary Health and Aging held a hearing on drug prices. Democratic presidential candidate Sanders, who then chaired the subcommittee, said he had invited the CEOs of Teva, Lannett and Marathon Pharmaceuticals LLC to testify and that they had declined.

Since then, Turing and Valeant have sparked further criticism of pricing industrywide. Turing created a media and political firestorm when it purchased the decades-old anti-parasitic Daraprim (pyrimethamine) from Impax Laboratories Inc. and increased the price for the drug from $13.50 per pill to $750 per pill. Valeant also increased the prices of two cardiovascular drugs, Nitropress (nitroprusside) and Isuprel (isoproterenol), by 212% and 525% respectively, after acquiring the rights to them from Marathon Pharmaceuticals.

The pharmaceutical industry has sought to distance itself from Turing and Valeant. The Pharmaceutical Research and Manufacturers of America criticized Valeant’s business model of buying older drugs and raising their prices in an October blog post (Also see "PhRMA Takes Aim At Valeant In Defense Of Drug Pricing By ‘Innovative’ Firms" - Pink Sheet, 26 Oct, 2015.).

But the cost of drugs continues to generate headlines and is a primary topic of discussion at industry events. HHS held a forum last month devoted to pharmaceutical innovation, access and affordability. Centers for Medicare and Medicaid Services Acting Administrator Andrew Slavitt noted the need to improve drug-pricing transparency and asked for input on what the department could do to improve affordability (Also see "HHS Drug Forum: CMS' Slavitt Highlights Price Transparency As One Key To Affordability" - Pink Sheet, 20 Nov, 2015.).

Last week, the Forbes Healthcare Summit featured a panel of pharmaceutical executives who focused almost exclusively on drug pricing. Most of them agreed that the system must change to address the rising cost of health care spending, although they did not specify what might be done (Also see "All-Star CEOs Discuss Pricing, But Come Up Short On Solutions" - Pink Sheet, 7 Dec, 2015.).

Meanwhile, the controversy has given the government a new target for investigation. The DOJ has issued numerous subpoenas against both brand and generic firms.

Valeant noted in a 10-Q filing that on or about Oct. 14 it received subpoenas from the US Attorney’s Office for the District of Massachusetts and the US Attorney’s Office for the Southern District of New York requesting documents related to the company’s patient assistance programs, distribution of its products, information provided to CMS, and pricing decisions.

Merck announced in its Nov. 5 10-Q that it has received a civil investigative demand from the US Attorney’s Office in the Eastern District of Pennsylvania requesting information relating to its contracting and pricing of Dulera (mometasone/formoterol) Inhalation Aerosol with certain pharmacy benefit managers and Medicare Part D plans.

And the New York Attorney General’s office is reportedly investigating Turing’s restricted distribution of Daraprim.