Pharmaceutical Manufacturers Pay Hundreds of Millions to Settle Price-Fixing Charges

Three pharmaceutical manufacturers have agreed to pay a combined total of $447.2 million to resolve alleged violations of the False Claims Act related to price-fixing conspiracies for several generic drugs, according to the US Department of Justice (DOJ).

The 3 companies—Apotex Corporation, Sandoz Inc, and Taro Pharmaceuticals USA, Inc,—allegedly caused drug prices to increase for federal health care programs and beneficiaries.

“Conspiring to raise prices on generic medications is illegal and could prevent patients from being able to afford their needed prescription drugs,” said Special Agent in Charge Maureen R. Dixon of the Philadelphia Regional Office of the Department of Health and Human Services, Office of the Inspector General (HHS-OIG), in a statement.

“Americans have the right to purchase generic drugs set by fair and open competition, not collusion,” she said. “HHS-OIG along with our law enforcement partners will continue to investigate allegations of companies engaging in actions that put the public and the Medicare program at risk.”

The government alleges that the 3 companies paid and received compensation through arrangements on price, supply, and customer allocation with other pharmaceutical manufacturers for certain generic drugs manufactured by the companies, which is not allowed under the Anti-Kickback Statute. That statute prohibits companies from making or receiving payments in return for arranging the purchase or sale of items, including drugs, for which payment may be made by a federal health care program.

“Protecting TRICARE, the health care system for US military members and their dependents, is a top priority for the Department of Defense, Office of Inspector General, Defense Criminal Investigative Service (DCIS),” said Special Agent in Charge Patrick J. Hegarty, DCIS Northeast Field Office, in a statement.

“When pharmaceutical corporations artificially inflate prices, they undermine the integrity of TRICARE and place an unnecessary financial burden on the program,” he said. “The settlement agreements announced today are the result of a joint effort and demonstrate the ongoing commitment of DCIS to work with our law enforcement partners, DOJ Civil Frauds and the USAO-EDPA [US Attorney’s Office-Eastern District of Pennsylvania], to investigate health care fraud.”

Apotex Corporation has agreed to pay $49 million in connection with its sale of pravastatin, a drug used to treat high cholesterol and triglyceride levels. Sandoz Inc has agreed to pay $185 million. The drugs at issue produced by Sandoz include benazepril HCTZ, which is used to treat hypertension, and clobetasol, a corticosteroid used to treat skin conditions. Taro Pharmaceuticals USA, Inc, has agreed to pay $213.2 million. The Taro drugs allegedly implicated in this scheme include etodolac, a nonsteroidal anti-inflammatory drug used to treat arthritis and pain, and nystatin-triamcinolone cream and ointment, a combination of an antifungal medicine and steroid used to treat certain types of skin infections. All 3 companies previously entered into deferred prosecution agreements with the federal Antitrust Division to resolve related criminal charges.

“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,” Acting US Attorney Jennifer Arbittier Williams for the Eastern District of Pennsylvania, said in a statement. “We will continue to aggressively pursue these violations of the Anti-Kickback Statute and the False Claims Act and obtain significant recoveries.”

In addition to these settlement agreements, each company also entered a 5-year corporate integrity agreement with OIG. The provisions of these agreements include unique internal monitoring and price transparency provisions, as well as a requirement that the companies implement compliance measures, including risk assessment programs, compliance-related certifications from company board members and executives, and executive recoupment provisions.

“These kickback schemes harm Medicare, Medicaid, and patients,” Chief Counsel Gregory E. Demske for the Inspector General at HHS, said in a statement. “The [corporate integrity agreements] 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.”

Reference

Pharmaceutical companies pay over $400 million to resolve alleged False Claims Act liability for price-fixing of generic drugs. US Department of Justice. News release. October 1, 2021. Accessed October 13, 2021. https://www.justice.gov/opa/pr/pharmaceutical-companies-pay-over-400-million-resolve-alleged-false-claims-act-liability