The Antitrust Division of the United States Department of Justice (DOJ) recently announced that a generic pharmaceutical company, Rising Pharmaceuticals, Inc. (Rising), was charged for conspiring to fix prices and allocate customers for a generic hypertension drug.
According to the one-count felony charge filed in the United States District Court for the Eastern District of Pennsylvania, from around April 2014 until at least September 2015, Rising was a participant in a criminal antitrust conspiracy with a competing generic drug manufacturer and its executives. The conspiracy involved fixing prices and allocating customers for Benazepril HCTZ, a generic medication used to treat hypertension.
Deferred Prosecution Agreement and Civil Agreement
On the same day of the announcement of the charge, the Antitrust Division also announced a deferred prosecution agreement (DPA) with Rising. Under the DPA, Rising admits to conspiring to fix prices and allocate customers for Benazepril HCTZ and agrees to pay restitution in the amount of $1,543,207 to victims of its conduct.
In a separate agreement between Rising and the DOJ Civil Division, the company agrees to pay $1.1 million in civil damages for False Claims Act violations predicated on the antitrust conduct. Therefore, the restitution is partially offset by this payment, but only in the amount of $438,066.
Rising is also required to pay a $1.5 million monetary penalty, reduced from the $3.6 million penalty called for in the U.S. Sentencing Guidelines. The reduction is due to Rising’s financial condition and liquidation. Both the DPA and the civil agreement must be approved by the bankruptcy court.
Future Cooperation by Rising
In addition to the required payments, the DPA requires that Rising fully cooperate with the continuing criminal investigation by the Antitrust Department. To allow Rising to comply with the agreement’s terms, the United States will defer prosecuting Rising for three years, or until its ongoing bankruptcy proceedings become final, whichever comes first. Once again, the agreement will not be final until accepted by the court.
Ongoing Investigation
The Justice Department has been investigating more than a dozen generic pharmaceutical companies since 2014, including well-known companies like Teva Pharmaceuticals, accusing them of price-fixing and dividing up the market to make higher profits
This marks the fourth charge in the Antitrust Division’s ongoing investigation into the generic pharmaceutical industry: two executives have been charged and plead guilty to criminal antitrust violations and Heritage Pharmaceuticals Inc. was charged and entered into a deferred prosecution agreement with the Antitrust Division.
“Today’s charge, like the previous corporate and individual charges announced in this investigation, publicly affirms the Antitrust Division’s steadfast commitment to prosecuting the companies and executives who fixed prices of generic pharmaceuticals,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division. “Rising and its co-conspirators exploited patients that rely on Benazepril HCTZ as a low-cost alternative to brand-name medications to treat high blood pressure. The deferred prosecution agreement is an important step in restoring integrity to the generics industry. It will require from Rising not only an admission of guilt, a criminal penalty and cooperation in the ongoing investigation, but also restitution to the direct purchasers that bought Benazepril HCTZ at artificially inflated prices.”