On July 23, 2020, the United States Department of Justice (DOJ) announced that Taro Pharmaceuticals U.S.A., Inc. (Taro) was charged with conspiring to fix prices, allocate customers, and rig bids for generic drugs. The two-count felony charging document alleged that Taro participated in two criminal antitrust conspiracies, each with a competing manufacturer of generic drugs, and various executives.
The Deferred Prosecution Agreement
In conjunction with the filing, the DOJ announced a deferred prosecution agreement (DPA) that resolves the charges against Taro and in which Taro agrees to pay $205,653,218 in criminal penalties and admits that sales affected by the charged conspiracies exceeded $500 million.
In the DPA, Taro admitted to participating in two conspiracies between 2013 and 2015. One of the conspiracies involved Sandoz Inc., former Taro Vice President of Sales and Marketing Ara Aprahamian, and other individuals, and went from at least March 2013 through at least December 2015. The second charge involved a conspiracy with a generic drug company based in Pennsylvania (and some individuals) from at least as early as May 2013 until at least December 2015.
According to the DOJ, the charging document and DPA state that Taro and its co-conspirators agreed to fix prices, allocate customers, and rig bids for numerous generic drugs.
Under the DPA, Taro agrees to continue cooperating fully with the ongoing criminal investigation. As long as Taro adheres to the terms of the DPA, the DOJ will dismiss the Information at the end of a three-year period.
DOJ Civil Division
In addition to the criminal resolution, DPA, and criminal penalties, Taro agreed to pay $213.3 million to resolve all claims related to federal healthcare programs. Taro is also discussing a separate Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General (HHS OIG). That CIA would supplement Taro’s current policies and global code of conduct.
“We are happy to have reached this global resolution with the DOJ,” said Uday Baldota, Taro’s CEO. “Taro is committed to the highest level of ethics and integrity and we will continue to fully cooperate with the government on its ongoing investigation into the generic pharmaceutical industry.”
Other Cases
This is the tenth case in the DOJ’s Antitrust Division’s ongoing investigation into the generic pharmaceutical industry. As of today, five of the six companies charged – including Sandoz, Taro’s co-conspirator – have admitted to their roles in the antitrust conspiracies and have resolved the charges through DPAs. The companies have collectively agreed to pay more than $426 million in criminal penalties.
In June 2020, the DOJ charged Glenmark Pharmaceuticals, Inc. with allegedly collecting $200 million worth of overcharges for pravastatin and other drugs through illegal cartel agreements with competing generic pharmaceutical companies. Glenmark has not agreed to any wrongdoing, and has committed to fighting the charges.
Individuals Involved
Some may remember that earlier this year, in February, Ara Aprahamian was indicted for his involvement and is currently awaiting his trial. The other three individual executives have all pleaded guilty, including a former executive at Sandoz, Hector Armando Kellum.