Aetna sues drugmakers over alleged price fixing
Drugmakers, Aetna alleged, determined their market allocation by providing high cover bids, or refusing to bid for some customers.
Photo: Jeff Lagasse/Healthcare Finance News
Health insurer Aetna has filed a lawsuit against several drug companies, including Pfizer, Novartis and Teva Pharmaceuticals, for allegedly fixing the prices of 111 generic medications and monopolizing and restraining trade.
The CVS Health subsidiary claimed in the suit that, beginning around 2012, the drugmakers communicated privately to determine the market share and prices of certain drugs, with Aetna accusing the companies of destroying any written evidence of these communications.
Drugmakers, Aetna alleged, effectively determined their own market allocation by providing high cover bids, or refusing to bid for certain customers, which enabled them to raise and then maintain prices for certain drugs, including penicillin and amoxicillin.
These schemes eliminated competition, which generally lowers prices for private insurers, consumers and the federal government, said Aetna.
The insurer said it was pursuing injunctive, equitable and declaratory relief.
WHAT'S THE IMPACT?
Calling the alleged conspiracy "egregious," Aetna said the scheme was designed to avoid price erosion, increase prices for targeted products and maintain artificially inflated prices. It cited as evidence probes by the state attorney general that resulted in three federal lawsuits.
The lawsuit details price increases for several drugs, including Nadolol, which shot up in price 2,762%; Clomipramine, which treats obsessive compulsive disorder, which increased 2,600%; propranolol HCL, a heart medication, which increased 1,000%; and oxybutynin chloride, which shot up somewhere between 1,100 and 1,500%.
Drug purchasers, especially insurers, suffered as a result, Aetna claimed, since they were paying unfairly high prices for generic drugs that are typically placed on formularies to lower costs.
Aetna is asking for a court order forcing the drugmakers to overhaul their contracts and practices to promote greater price transparency, and for a ban on "fair share" arrangements, in which the drugmakers allegedly fixed prices and rigged bids.
THE LARGER TREND
CVS Health's third-quarter earnings showed Aetna underperforming. Its revenues hit $33 billion in Q3, up from $26.3 billion in Q3 2023. But it posted an adjusted operating income loss of $924 million this year. Its Medical Benefits Ratio was 95.2% in the quarter, compared to 85.7% in the same period last year.
Due in part to Aetna's performance, CVS Health officials said they were not providing a formal outlook, though CVS Health president and CEO David Joyner said he was optimistic about the segment's recovery prospects, particularly with the announcement that Steve Nelson, a former UnitedHealth Group insurance leader, to run Aetna.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
