pill

Melissa is a mother of 2, lives in Utah, and writes for a multitude of sites. She is currently the EIC of HarcourtHealth.com and writes about health, wellness, and business topics.

Drug manufacturers Teva Pharmaceutical and Prinston Pharmaceutical were recently forced to recall the important drug valsartan after the Food and Drug Administration determined that the blood pressure medication might contain carcinogens. Drug manufacturer Alembic Pharmaceuticals was not affected by the recall, as its own version of the medication was not found to contain the same cancer-causing ingredients.

When Alembic Pharmaceuticals discovered that its two competitors were out of the game, the company made the call to drastically increase the price of all its valsartan medications by more than three times what it once was.

Not surprisingly, Alembic Pharmaceuticals is hesitant to take calls from journalists. The managing director of the Indian company, Pranav Amin, said the company is only trying to create a workable supply chain and do what it needs to do in order to adjust to the changing market and take advantage of new opportunities. The company has enjoyed a period of substantial growth in the U.S. since the price hike.

Most of the price hikes for drugs and medications in the U.S. were reported in the drugs that were least prescribed. The prices remained stable, but high, while the companies had little or not competition.

Price gouging occurs when a drug manufacturer or seller knowingly hikes the prices of a medication beyond what is considered reasonable or ethical. Unfortunately price gouging is not universally illegal, and has only been criminalized in 35 of 50 states since new laws were implemented in 2008. Whether or not these laws affect sales in those states by an Indian manufacturer is unclear, and the jury is still out on whether or not the actions of company executives for Alembic Pharmaceuticals constitute price gouging at all.

Part of the reason that drug manufacturers are able to keep prices so high and reduce or eliminate competition is because patent protection laws almost guarantee there won’t be any. Because these laws are so strict, drug manufacturers can sell new medications at whatever price point they like in order to turn a profit, whether the price is fair or not. The patent protections do have an expiration date, at which point competitors will typically swoop in with their own generic versions of the same drug. The competition keeps prices lower.

Walmart is one such retailer that sells these generic versions for very low prices, turning only a small profit and almost guaranteeing a high volume will be sold.