Sixth and Seventh Companies to Admit to Price-Fixing Charges Affecting Critical Generic Drugs; First Resolutions to Require Divesting Drug Product Lines; Teva USA to Pay $225 Million and Donate $50 Million in Drugs; Glenmark USA to Pay $30 Million
The Justice Department announced today deferred prosecution agreements resolving criminal antitrust charges against Teva Pharmaceuticals USA, Inc. and Glenmark Pharmaceuticals Inc., USA. As part of those agreements, both companies will divest a key business line involved in the misconduct, and as an additional remedial measure, Teva will make a $50 million drug donation to humanitarian organizations. Teva will pay a $225 million criminal penalty — the largest to date for a domestic antitrust cartel — and Glenmark will pay a $30 million criminal penalty. Both companies will face prosecution if they violate the terms of the agreements, and if convicted, would likely face mandatory debarment from federal health care programs.
The agreements each require the companies to undertake remedial measures, including the timely divestiture of their respective drug lines for pravastatin, a widely used cholesterol medicine that was a core part of the companies’ price-fixing conspiracy. This extraordinary remedy forces the companies to divest a business line that was central to the misconduct. Teva must also donate $50 million worth of clotrimazole and tobramycin, two additional drugs with prices affected by Teva’s criminal schemes, to humanitarian organizations that provide medication to Americans in need. Both Teva and Glenmark have agreed, among other things, to cooperate with the department in the ongoing criminal investigations and resulting prosecutions, report to the department on their compliance programs, and modify those compliance programs where necessary and appropriate.
“Today, the Antitrust Division and our law enforcement partners hold two more pharmaceutical companies accountable for raising prices of essential medicines and depriving Americans of affordable access to prescription drugs. The resolutions include extraordinary remedial measures that require the breakup of assets and restore competition to the industry,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “Companies in heavily regulated industries are on notice that the division will not hesitate to hold them accountable and will not tolerate recidivism.”
“The Department of Justice’s Antitrust Division, along with our other federal law enforcement partners, secured a victory with today’s settlement agreement in our fight against price-fixing and collusion,” said Executive Special Agent in Charge Kenneth Cleevely of the U.S. Postal Service Office of Inspector General (USPS-OIG). “The USPS-OIG will vigorously investigate those who would engage in harmful anticompetitive practices, and we continue to ask for the public’s assistance in identifying and reporting those engaged in this type of activity.”
“The FBI works relentlessly with our partners to investigate crimes that violate our nation’s long-held principles of fair competition,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “Today’s agreements show that we are committed to ensuring that entities that engage in price-fixing, bid-rigging and market-allocation schemes to the detriment of the American people face justice.”
As part of the agreements, Teva admitted to participating in three antitrust conspiracies that affected essential medicines — including pravastatin, clotrimazole and tobramycin — and Glenmark admitted to participating in a conspiracy to fix the price of pravastatin. Pravastatin is a commonly prescribed cholesterol medication that lowers the risk of heart disease and stroke; clotrimazole is commonly prescribed to treat skin infections; and tobramycin is commonly prescribed to treat eye infections and cystic fibrosis. Also as part of the agreements, the parties today filed joint motions, which are subject to approval by the Court, to defer prosecution and trial on the filed charges for the three-year terms of the agreements or until after the criminal penalties are paid, whichever occurs later.
During the multi-year investigation, the Antitrust Division and its law enforcement partners uncovered price-fixing, bid-rigging and market-allocation schemes affecting many generic medicines, and charged seven generic pharmaceutical companies for their participation in the schemes. With today’s agreements, all seven companies have resolved their criminal charges and collectively agreed to pay more than $681 million in criminal penalties.
In June 2020, Glenmark was charged with one count of price fixing for its role in a conspiracy affecting the prices of pravastatin and other generic drugs. A grand jury returned a superseding indictment against Glenmark and Teva in August 2020 for the same and similar conduct. Count one alleged that Teva conspired with Glenmark, Apotex Corp. and others to increase prices for pravastatin and other generic drugs. Apotex admitted its role in this conspiracy and agreed to pay a $24.1 million penalty in May 2020. Count two charged Teva for its role in a conspiracy with Taro Pharmaceuticals U.S.A. Inc., its former executive Ara Aprahamian and others to increase prices, rig bids and allocate customers of generic drugs, including clotrimazole, a medicine used to treat skin infections. Taro admitted to its role in this conspiracy and agreed to pay a $205.7 million penalty to resolve that charge in July 2020. Aprahamian was indicted in February 2020 and is awaiting trial. Count three charged Teva for its role in a conspiracy with Sandoz Inc. and others to increase prices, rig bids and allocate customers of generic medicines, including cystic fibrosis medicine tobramycin. A former Sandoz executive pleaded guilty for his participation in the conspiracy in February 2020. Sandoz admitted to its role in the conspiracy and agreed to pay a $195 million penalty in March 2020. Together, these charges and the resolutions announced today reflect the Department’s commitment to holding corporate offenders responsible even where collateral consequences may be at issue.
United States Postal Service Office of Inspector General, the FBI’s Washington and Philadelphia Field Offices and the U.S. Attorney’s Office for the Eastern District of Pennsylvania investigated the case.
Trial Attorneys Matthew Lunder, Thomas Tynan, Michael Sawers and Barry Joyce of the Antitrust Division’s Washington Criminal I Section and Assistant Chief Mark Grundvig and Trial Attorney Julia Maloney of the Antitrust Division’s Washington Criminal II Section are prosecuting the cases, with the assistance of Antitrust Division Economists Evan Gee and Peter Woodward and Financial Analyst Joanne Legomsky.
Anyone with information in connection with this investigation should contact the Antitrust Division’s Complaint Center at 888-647-3258, or visit www.justice.gov/atr/report-violations.
Tags: Drug Prices New Trends Price Fixing