Letter to Edith Ramirez, Federal Trade Commission Chairwoman - Investigate Pharmaceutical Companies for Possible Antitrust Violations In Light of Recent Alarming Drug Price Increases

Letter

Dear Chairwoman Ramirez:

We are writing to you regarding a troubling practice that may be harming American consumers. For years, some companies have purchased older drugs and imposed substantial price increases. Some companies may be combining a substantial price increase for a prescription medication with a closed distribution system. If the restricted distribution prevents or delays generic competition, it could subject consumers to unnecessarily high prescription drug prices. We urge you to investigate whether companies are using restricted distribution in a manner that violates the Federal Trade Commission Act.

As a public policy matter, this practice is disturbing, but as you know, the antitrust laws do not apply to unilateral price increases, no matter how unfair. Turing Pharmaceuticals' 5,000 percent price increase on Daraprim, from which they have retreated, is the most recent example of this disturbing trend.

Such price increases could convince another company to seek approval for a generic version, enter the market, and lower the price for the product. This is how the free market is supposed to work. To conduct the necessary tests to receive approval from the Food and Drug Administration, a generic company would need a limited amount of the branded product. According to press reports, Turing, and perhaps others, are restricting distribution of their product. If a company were to employ this strategy to deny competitors supply for use in a generic application, it would be doing more than simply raising prices. It could be excluding competition from the market to the detriment of consumers and violating the Federal Trade Commission Act.

This issue is extremely important to consumers; access to affordable drugs and in particular generics is a necessary element of affordable health care. We believe there is sufficient concern for the Federal Trade Commission to thoroughly investigate whether Turing or any other pharmaceutical company has used restricted distribution practices to insulate a price increase from competition.

Thank you for your attention to this matter.

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