Three Generic Pharmaceutical Manufacturers Agree to $447 Million Settlement for False Claims Act Violations
On October 1, 2021, the United States Department of Justice announced that three generic pharmaceutical manufacturers agreed to pay a total of $447.2 million to resolve alleged violations of the False Claims Act. The three manufacturers, Taro Pharmaceuticals USA, Inc., Sandoz Inc., and Apotex Corporation were accused of conspiring to fix the price of various generic drugs, which allegedly resulted in higher drug prices for federal health care programs and beneficiaries.
The DOJ alleged that between 2013 and 2015, all three manufacturers paid and received compensation prohibited by the Anti-Kickback Statute, such as making agreements based on price, supply, and allocation of customers with other pharmaceutical manufacturers for certain generic drugs they manufactured.
While the individual settlements are discussed in more detail below, each company also entered into a five-year corporate integrity agreement (CIA) with the Office of Inspector General (OIG). The CIAs include internal monitoring and price transparency provisions that have not been seen before. They also require the common compliance measures, such as risk assessment programs, executive recoupment provisions, and compliance-related certifications from company executives and board members.
The three companies previously entered into deferred prosecution agreements (DPAs) 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 certain generic drug prices. Sandoz paid a criminal penalty of $195 million and admitted to conspiring with four other generic drug companies to fix certain generic drug prices. Apotex paid a criminal penalty of $24.1 million and admitted to conspiring to increase and maintain the price on pravastatin.
Taro Pharmaceuticals USA, Inc.
For its involvement, Taro agreed to pay $213.2 million to settle the allegations. Taro drugs at issue include etodolac (a nonsteroidal anti-inflammatory drug used to treat pain and arthritis) and nystatin-triamcinolone (a cream and ointment used to treat certain kinds of skin infections). Of the total settlement with Taro, $118,873,261 is restitution.
The settlement agreement refers to the DPA that Taro entered into in connection with a two-count criminal Information that charged the company with conspiring to suppress and eliminate competition by agreeing to increase and maintain prices of certain generic drugs sold in the United States.
Sandoz Inc.
Sandoz agreed to pay $185 million to settle the allegations. Sandoz drugs at issue include benazepril HCTZ (used to treat hypertension) and clobetasol (a corticosteroid used to treat skin conditions). Of the $185 million settlement, $113.9 million is restitution.
The settlement agreement refers to the DPA Sandoz entered into in connection with the four-count criminal Information that charges the company with conspiring to suppress and eliminate competition by allocating customers, rigging bids, and fixing and maintaining prices in violation of the Sherman Antitrust Act.
Apotex Corporation
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. Of the $49 million settlement, $37,692,307.69 is restitution.
The settlement agreement refers to Apotex’ DPA in connection with a one-count criminal Information that charged the company with conspiring to suppress and eliminate competition by agreeing to increase and maintain prices of pravastatin sold in the United States from around May 2013 through at least December 2015.
Conclusion
These settlements mark the third, fourth, and fifth settlements arising out of this investigation. The investigation and resolution of these matters illustrates the government’s emphasis on fighting healthcare fraud. It is possible that further settlements and CIAs stem from this investigation.