The DoJ alleges that between 2013 and 2015, all three pharma companies engaged in a price-fixing scheme and paid and received compensation through arrangements on price, supply, and allocation of customers for generic drugs they manufactured. The alleged practices are prohibited by the Anti-Kickback Statute of federal law. Taro Pharmaceuticals USA, will pay $213 million; Sandoz has agreed to pay $185 million; and Apotex will pay $49 million to settle the charges.
“Illegal collaboration on the price or supply of drugs increases costs both to federal health care programs and beneficiaries,” said Acting Assistant Attorney General Brian Boynton of the Justice Department’s Civil Division. “The department will use every tool at its disposal to prevent such conduct and to protect these taxpayer-funded programs.”
Criminal Charges Deferred
The civil settlements come on the heels of criminal charges launched by the Antitrust Division of the DoJ and settled in 2020. All three companies previously entered into deferred prosecution agreements with the Antitrust Division to resolve related criminal charges.
Taro paid a criminal penalty of $205.6 million and admitted to conspiring with two other generic drug companies to fix prices on certain generic drugs. Sandoz paid a criminal penalty of $195 million and admitted to conspiring with four other generic drug companies to fix prices. Apotex paid a criminal penalty of $24.1 million and admitted to conspiring to increase and maintain the price on its drug, a pravastatin.
“These civil settlements are another achievement in my office’s efforts to hold generic drug companies accountable for the consequences arising from price-fixing schemes, including the harm to federal health care programs,” said Acting U.S. Attorney Jennifer Arbittier Williams for the Eastern District of Pennsylvania. “We will continue to aggressively pursue these violations of the Anti-Kickback Statute and the False Claims Act and obtain significant recoveries.”
Corporate Integrity Agreements
In connection with its settlement agreement of the False Claims Act violations, each company also entered a five-year corporate integrity agreement with Office of Inspector General. The CIAs include unique internal monitoring and price transparency provisions. They also require the companies to implement compliance measures including risk assessment programs, executive recoupment provisions and compliance-related certifications from company executives and board members.
“The CIAs promote transparency and accountability by requiring the companies to report price-related information to OIG and mandating individual certifications by key executives involved in pricing and contracting functions,” said Chief Counsel Gregory E. Demske for the Inspector General at HHS.
Taro U.S.A., for example, said that it has implemented and will continue to implement a compliance program designed to prevent and detect criminal antitrust violations throughout its operations, including those of its subsidiaries.
The Anti-Kickback Statute prohibits companies from receiving or making payments in return for arranging the sale or purchase of items such as drugs for which payment may be made by a federal health care program. The provisions are designed to ensure that the supply and price of health care items are not compromised by improper financial incentives. 