The Year for Investigations into Drug Makers

As we near the close of 2017, we are not at a loss for corporate scandal, wrongdoings on the part of corporate CEOs and employees.  The pharmaceutical industry has long been at the center of investigations, and lawmakers in 45 states are now taking action.   

Perrigo Co. (NYSE: PRGO), Mylan (MYL) & Many Other Generic Drug Makers

The largest maker of over-the-counter drugs in the world, Perrigo Co., was the focus of a corporate scandal in May when the Department of Justice raided their offices during an investigation into price collusion.  The government was looking mainly at the price of drugs that Perrigo manufactures for skin conditions.

Price collusion happens when companies conspire with each other to generate an unfair market advantage.  Mylan NV (MYL) is one of the companies accused, and you might remember their involvement with the notorious price fixing scandal in 2016 involving the EpiPen.  

On October 31, 2017, investigations into price gouging of big pharma culminated into a large group of US states accusing key generic drug makers of participating in a far-reaching price fixing scheme.  The investigation widened an existing lawsuit by adding many more drug makers and medicines, sending some drug maker company shares falling.  

Attorney Generals from 45 states and the District of Columbia are accusing 18 companies while naming 15 medicines in the lawsuit, which includes the president of Mylan NV and CEO of India’s Emcure Pharmaceuticals. The charges allege the company executives agreed in advance upon prices, price increases and the percentage of market share that each company would have.  

One Attorney General states in the suit that it is their belief that price fixing is pervasive, systematic and exists in a culture of collusion.  

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