Feds take case for possible saline price fixing to grand jury, Baxter discloses

Justice Department building inscription
Baxter International says one of its employees received a grand jury subpoena from a federal court in Pennsylvania for an investigation by the Justice Department’s antitrust division into possible price fixing of saline solution.

The chance that some drugmakers will be charged for fixing the price of their saline solution has escalated as a federal probe has moved from the investigation phase to a federal courtroom where federal prosecutors are presenting evidence to a grand jury.

Notice of the new phase came in an SEC filing from Baxter International on Friday, in which it said that one of its employees received a grand jury subpoena from a federal court in Pennsylvania for an investigation by the Justice Department’s antitrust division.

The subpoena ordered the employee to provide documents and testimony about the manufacture, pricing and shortages of saline solution and other injectables. It also wants info about and any communications the company had with competitors about any of that, Baxter reported. The drugmaker, which said it is cooperating, earlier disclosed that it got a request from the New York attorney general’s office to provide info about the saline IV business.

The shortage and rapidly rising prices of the most ubiquitous of hospital supplies came to the forefront in the fall of 2015 when senators from both parties held hearings and called on the Federal Trade Commission to investigate why shortages of saline persisted even as prices were rising. The senators pointed out that Baxter, B. Braun and Hospira—now owned by Pfizer—were the three largest producers of saline for the U.S. market. The drugmakers denied any collusion at the time.

Baxter has pointed out that it has upped production to deal with saline shortages. But execs also told investors at the time that shortages allowed the company to raise prices and earn substantially more from saline.

A healthcare provider in Alabama that testified at the congressional hearing has since sued Baxter and Pfizer, alleging that they “created a public health crisis—one that was avoidable and that unnecessarily drove up the cost of healthcare for hospitals and vulnerable patients,” according to lawyers in the case.

The investigation of possible collusion in saline sales comes even as federal investigators have kicked off prosecutions in a wide-ranging case into alleged price fixing of other generic drugs. Two former execs at New Jersey-based Heritage Pharmaceuticals were charged in December with conspiring to “fix prices, rig bids and allocate customers” for the antibiotic doxycycline hyclate and the diabetes drug glyburide.  

Those charges follow disclosures by a series of generics companies, including Teva and Mylan, that they received subpoenas from federal officials as part of an industrywide investigation.  

About 20 states have also weighed in with a civil lawsuit that accuses Mylan, Teva, Heritage Aurobindo Pharma, Citron and Mayne Pharma with colluding on prices.