Table of Contents
- Pharmaceutical Price Gouging
- What is Pharmaceutical Price Gouging?
- Why Are Pharmaceutical Prices So High?
- History of Pharmaceutical Price Gouging
- Pharmaceutical Price Gouging Laws
- Pharmaceutical Price Gouging Examples
- How Does Price Gouging Affect Supply and Demand?
- What is Being Done to Prevent Pharmaceutical Companies from Price Gouging?
- How to Stop Pharmaceutical Price Gouging
- Who Can Be a Price-Gouging Whistleblower in a Qui Tam Lawsuit?
- Are Drug Price-Gouging Whistleblowers Protected under the False Claims Act?
- If I Prevail in My Qui Tam Lawsuit, Am I Entitled to a Reward?
- Pharmaceutical Price Gouging: Whistleblower FAQs
- Let Our Qui Tam Attorneys Help You Report Pharmaceutical Price Gouging
Major drug companies like Pfizer, Johnson & Johnson, and AbbVie release nearly 50 new drugs to the masses every year. It takes 10 to 15 years for a new drug to pass all three phases of clinical trials and millions, sometimes billions, of dollars to develop just one successful drug.
Once a drug hits shelves, pharmaceutical manufacturers want to recoup as much of their financial investment as possible and turn a profit. For decades, drug companies have reaped the financial benefits of pharmaceutical price gouging, or intentionally increasing the price of a drug in a way that is excessive and unjustified. In fact, revenues reached 1.48 trillion dollars in 2022.
Drug companies and other industry players have too much control over medication prices and too few competitors or other market forces to stop them. However, one way to stand up to these companies is to report manufacturers or distributors that misrepresent their prices to the government.
Tycko & Zavareei LLP is an experienced whistleblower law firm that goes head-to-head with Big Pharma, helping employees take a stand against corruption, including pricing fraud, kickbacks, and other types of healthcare fraud. We will explore pharmaceutical price gouging and how to bring it to light and help the people it hurts most.
What is Pharmaceutical Price Gouging?
Drug makers set the prices for prescription medications, meaning high costs are no coincidence. There is evidence of drug companies gaming the system through price gouging, a deliberate tactic meant to extract profits from patients and taxpayers, achieve and surpass revenue targets, and incentivize pharmaceutical executives to hike prices for personal and professional gain.
This behavior might be subtle to consumers, but drug companies know what they are doing. People often have to choose between medications, paying bills, or buying food. Examples of price gouging and potential drug pricing fraud include:
- Manufacturers acquiring old drugs and increasing the prices after the patents expire.
- New drugs marketed as first-of-their-kind getting sky-high price tags.
- “Pay for delay” agreements, which stall the release of generic drugs in the marketplace that are intended to compete with pricey brand-name drugs.
- Hindering generic competitors from participating in the market by filing patents that cover the drug’s active ingredient and its forms (i.e., liquid versus pill form).
The sad truth is that medication could be affordable, but this is far from reality in the United States. Drug prices are twice as high than in 32 other countries, and as you now know, it is primarily because pharmaceutical companies set the costs.
Americans spend twice as much on prescription drugs than anyone else, averaging about $1,300 per person annually. There is a rhyme and reason to pricey, often inexplicable pharmaceutical prices. According to GoodRx Health, the following factors can influence prescription prices:
- Pharmaceutical companies setting prices with a severe lack of government regulation in the U.S.
- America does not negotiate prices with manufacturers like countries with government-run healthcare.
- Health providers choosing higher-priced brand-name drugs with more proven clinical research and less risk than generic options.
- Drug patents driving high drug prices and preventing generic manufacturers from releasing cheaper options for a specific timeframe.
- Inflated drug prices as a symptom of price gouging and charging patients more than a prescription drug’s market value.
Competitors of drug manufacturers, executives, employees, and anyone else who has witnessed intentional price gouging might benefit from a discussion with an experienced qui tam attorney.
Can Pharmaceutical Companies Raise Prices?
Pharmaceutical companies that manufacture prescription drugs can freely raise costs as they see fit. Drug makers typically roll out price increases in January or July for existing drugs, and the number of price hikes usually varies from year to rear. 2023 is an excellent example of this.
Well-known industry players like Pfizer Inc., GlaxoSmithKline PLC, Bristol Myers Squibb, and Sanofi SA raised prices on more than 350 unique drugs in early 2023. Other drug manufacturers raised prices on more than 1,400 widely-used prescriptions.
Costs of doing business are often a disguise when drug manufacturers’ repeat behavior, like consistent price hikes and sky-high product launches, are really to blame.
Pharmaceutical companies that manufacture prescription drugs can freely raise costs as they see fit. Drug makers typically roll out price increases in January or July for existing drugs, and the number of price hikes usually varies from year to rear. 2023 is an excellent example of this.
Well-known industry players like Pfizer Inc., GlaxoSmithKline PLC, Bristol Myers Squibb, and Sanofi SA raised prices on more than 350 unique drugs in early 2023. Other drug manufacturers raised prices on more than 1,400 widely-used prescriptions.
Costs of doing business are often a disguise when drug manufacturers’ repeat behavior, like consistent price hikes and sky-high product launches, are really to blame.
History of Pharmaceutical Price Gouging
Consumers have suffered more medication price increases in the last 10 years than in previous years. Drug makers use different opportunities to increase drug prices, such as when medications expire or when a manufacturer buys out the rights to an old drug.
Daraprim—a remedy for treating a parasitic infection—is pharmaceutical price gouging at its finest. Introduced in 1953, the medication cost only $13.50 per pill. With no generic options or other suppliers to compete with, Turing Pharmaceuticals seized the chance to buy the rights in 2015 and raised the prescription’s price by 5,000 percent overnight. It went from $13.50 per pill to $750 per pill. There are plenty more stories just like this.
As we are about to dig into this further, more laws are surfacing to prevent Big Pharma from engaging in unlawful pricing strategies.
As pharmaceutical companies often engage in anticompetitive behavior, state price gouging laws (PGLs) were introduced in 2019 to prevent and authorize action against offering prescription drugs at disproportionate rates. PGLs aim to regulate drug pricing and bring any fraudulent behavior to light.
The laws review a drug’s base price, the number of price increases over some time, and the price increases themselves. Other factors might include the price of the drug today versus the price of the drug when it launched. With this data, lawmakers can properly determine drug cost issues or misconduct.
PGLs face legal challenges, and states have been slow to adopt them. About 19 states have implemented some form of prescription drug price transparency reporting, forcing drug companies to provide advance notice of any changes in the cost of a medication.
Price Gouging and the False Claims Act
Drug makers purposely pad medication prices and use price gouging to line their pockets. It breaks consumer trust and causes unnecessary financial hardships for people in need of medication.
Employees or other professionals with knowledge of price gouging can take action against drug makers and hold them accountable under the False Claims Act (FCA) with the help of a qui tam lawyer. This is also known as whistleblowing.
Pharmaceutical companies use false and misleading information and other tactics to cover up outrageously high prescription prices. This was on display in 2023 as some of the largest pharmaceutical companies introduced significant price increases on mainstay prescriptions. More people are struggling to afford one or more medications due to this extreme jump in price.
Qui tam lawsuits have uncovered some of the most egregious fraudulent acts by pharmaceutical companies, including:
- Pfizer increased prices on more than 100 drugs and issued a significant price increase of 16.8 percent on its popular drug, Solu-Cortef. The medication treats arthritis, blood diseases, and certain cancers.
- GlaxoSmithKline raised prices on more than 30 of its drugs, including a seven percent increase on its cancer drug Zejula, seizure drug Lamictal, and popular shingles vaccine Shingrix.
- Bristol Myers Squibb justified a nine percent price hike on its personalized CAR-T cell therapies, Abecma and Breyanzi. These medications were already more than $400,000 for blood cancer treatments.
- Gilead Sciences issued a 5.6 percent increase on HIV drugs, Biktarvy and Descovy. Before this, a 30-day supply of the oral tablet Biktarvy was around $4,006 at retail cost.
- AbbVie’s biologic treatment for arthritis, plaque psoriasis, and other immune diseases, Humira, generated $15.7 billion last year but was given a price increase on the heels of its expired patent.
Pharmaceutical companies have deep pockets and are expert marketers with a savvy ability to influence consumers and drive out the competition. Drug manufacturers use exclusivity and vulnerability to drive demand.
Many people rely on life-saving medications, so if costly brand-name drugs are the only option, they have no choice but to buy expensive prescriptions or risk serious health consequences.
States are taking a creative approach to prevent price gouging after laying some initial groundwork with transparent pricing laws. Prescription drug affordability boards (PDABs) in places like Maryland and Colorado serve an initiative to curb drug costs and establish reimbursement limits.
Other policies also are in the works to prohibit price gouging in generic and off-patent drugs and issue penalties for drug manufacturers that issue price increases which not supported by clinical data.
Anyone with evidence of a pharmaceutical company receiving government funds through deceptive means can work with an experienced qui tam law firm to prevent drug price gouging and pursue a reward under the False Claims Act.
There are seven different violations the FCA prohibits, including:
- False or misleading claims
- False or misleading records or statements
- Conspiracy
- Conversion
- Issuing false receipts
- Unlawful purchase of government property
- Reverse false claims
Pharmaceutical price gouging is a shameful business practice, and whistleblowers can help stop fraudulent drug companies from hurting more people.
Many people believe only C-suite executives are suited to become whistleblowers. Any person with information about or evidence of a company’s illegal activities, like price gouging, can become a whistleblower.
Examples of people or groups who are more likely to witness fraud involving pharmaceutical price gouging include company competitors, data analysis experts, pharmaceutical company employees and other industry professionals like prescription benefit managers, pharmacists, wholesale providers, and healthcare providers.
The False Claims Act protects pharmaceutical price gouging whistleblowers from retaliation by an employer. If a whistleblower’s employer retaliates against them for reporting activities involving potential price gouging, the whistleblower could file a separate claim for damages such as back pay, reinstatement, attorneys’ fees, and more.
Tycko & Zavareei LLP represents whistleblowers in qui tam lawsuits and workplace retaliation cases and is well-equipped to go up against a pharmaceutical company on a whistleblower’s behalf.
Given the seriousness of pharmaceutical price gouging and other types of fraud, anyone who comes forward with a legitimate whistleblower claim can be financially rewarded for doing so. Specifically, whistleblower rewards range from 15 to 30 percent of any proceeds the government collects from a whistleblower tip—the more valuable the information, the higher the reward.
What is a Whistleblower Complaint?
A whistleblower complaint is a formal submission that exposes a company or person’s alleged fraudulent activities or misconduct. Whistleblowers report serious issues like price gouging, healthcare fraud, and more.
How Long Do You Have to File a Whistleblower Complaint?
A qui tam attorney can advise you on your specific state laws, but whistleblowers usually have between 30 and 180 days to file a formal complaint with the appropriate governing bodies.
What is Whistleblower Retaliation?
Whistleblowers often experience discriminatory acts once they expose company fraud or corruption. Fear of employer retaliation is the number one reason whistleblowers do not come forward.
Often, managers or executives abuse their power and use actions like firing, layoffs, harassment or abuse, demotions, denying overtime or vacation, or reducing pay or hours to “get back” at a whistleblower.
Pharmaceutical companies prioritize profits over people, and it is time more drug manufacturers take responsibility for their harmful and unethical tactics.
Tycko & Zavareei LLP is a nationally-recognized qui tam law firm with a history of helping whistleblowers take a stand against Big Pharma. We are proud to highlight many successful whistleblower cases, from pharmaceutical price gouging to healthcare fraud, kickbacks, and more.
One of the most important decisions a person can make on their whistleblower journey is the qui tam attorney they choose. Our team has the right mix of experience, resources, and passion to take on tough cases and big companies.
We are prepared to navigate this brave act of service with you and make a difference together. Contact us today for a confidential case evaluation.
