Final answer:
Bulk purchasing of drugs by entities like pharmacies is legal, but if these groups set prices or divide markets to form a monopoly, they violate antitrust law.
Significant cases like the prosecution of international vitamin manufacturing cartels exemplify illegal price-fixing consequences, including large fines and jail time for executives.
Step-by-step explanation:
Entities like pharmacies forming groups to make bulk purchases of drugs for resale can have both legal and illegal implications, depending on how the group conducts its business. Making bulk purchases to achieve economies of scale is generally permissible.
However, when entities engage in collaboratively setting prices, dividing markets, or creating a monopoly to earn higher profits, they are likely in violation of antitrust law.
Antitrust laws are enforced globally, including in the European Union and the United States, to prevent market manipulation that could harm consumers and the economy.
For example, in the late 1990s, antitrust regulators prosecuted an international cartel of vitamin manufacturers, including the Swiss firm Hoffman-La Roche, the German firm BASF, and the French firm Rhone-Poulenc.
These companies coordinated production, pricing, and customer allocation strategies which led to artificially elevated market prices. In 1999, Hoffman-La Roche pled guilty and was subjected to a significant fine as well as jail time for a top executive.
Cases like the Mylan lawsuit and bribery incidents involving FDA officials further illustrate how corruption and illegal dealings related to drug approval and market manipulation can result in criminal charges and penalties.
Entities must navigate the intricate balance between legal bulk purchasing for better prices and the illegal activities associated with price-fixing and market division that can invoke antitrust violations and severe repercussions.