India’s generic exports to the US, the largest pharmaceutical market in the world, seems to be heading towards a major setback in the years to come. The top pharmaceutical companies of the country have been facing pressure from the US FDA by way of repeated inspections of their manufacturing facilities and suspensions of export of different products for some years. Now, the latest US charge on Indian pharmaceutical companies is about overcharging or price fixing of generic drugs in the US market. A group of 45 US States have accused major players in the generic drug business for price fixing and cartelization in marketing several medicines. A lawsuit, brought by the attorney generals of the 45 US States and the District of Columbia, accused 18 companies including some major Indian companies or their subsidiaries for price fixing of mainly 15 medicines. Indian companies are Sun Pharmaceuticals, Endo International PLC's unit of Par Pharmaceutical, Dr. Reddy's Labs, Apotex Corp, Glenmark Generics Ltd, Alkem Labs' unit, Ascend Laboratories and Zydus Pharmaceuticals Inc. The States said that the pharma companies and their executives divided customers in the US for their drugs among themselves and agreeing that each company would have a certain percentage of the market. These companies stated to have reached an agreement on price increases in advance. It appears that steady hike in prices of both branded and generic drugs by the manufacturers over the last few years sparked outrage and investigations in the US now. Indian companies have, however, refuted the charges leveled against them by the US authorities.
With patent protection prevailing in the US for pharmaceutical products, the multinational drug companies have been charging exorbitant prices for patented drugs for several years. In the absence of any intervention by the US government, this situation had helped the American and European drug makers to push up their sales and profits with no consideration for the patient community. It is not surprising therefore one cholesterol drug, Lipitor, used to a net sales of 25 billion dollars for Pfizer for some years. With expiry of patent for Lipitor and not having such a blockbusters anymore both sales and profit for the company declined steadily. Many more patents of pharmaceutical giants got expired during the last 20 years providing a great opportunity for Indian pharmaceutical companies to get into generic production as the American citizens wanted the same drug at much lower prices. Most of the India’s top pharmaceutical companies registered huge growth rate in sales and profitability with this demand for generics during the last 20 years or more. Sensing increasing acceptability for Indian generics in the US, more Indian companies started entering that market. This trend has motivated even the American companies to enter into generic manufacturing. The problem started from there. None of the companies wanted to reduce the prices of generics although cost of manufacturing of generics is far less than the prices they are selling. With the entry of more players into the generics market, cartelisation among the companies has become inevitable for all of them to maintain huge profits. Patient groups realized this dangerous trend and started opposing and approaching the US authorities. The US government action against these companies is only a result of this. At least Indian companies could have resisted the temptation to overcharge generics at the cost of losing the market.