Recently, the United States Department of Justice (DOJ) announced criminal penalties and deferred prosecution agreements (DPAs) resolving criminal antitrust charges against Teva Pharmaceuticals and Glenmark Pharmaceuticals. The agreements are the result of a multi-year investigation by the DOJ and law enforcement partners, which uncovered price-fixing, bid-rigging, and market-allocation schemes by multiple pharmaceutical companies that impacted many generic medicines.
The agreements reached with each company require each company to take certain remedial measures, including the timely divestiture of their respective drug lines for pravastatin, a widely used cholesterol medicine that was a key part of the companies’ price fixing conspiracy. In addition, Teva will pay a $225 million criminal penalty and make a $50 million drug donation of clotrimazole and tobramycin to humanitarian organizations. Glenmark will pay a $30 million criminal penalty. The $225 million criminal penalty by Teva is the largest penalty in history for a domestic antitrust cartel.
Teva and Glenmark have both agreed to cooperate with the DOJ in any ongoing criminal investigations and prosecutions as well as keep the DOJ updated on their compliance programs and modify their compliance programs where necessary and appropriate. Teva also agreed to “engage an independent monitor to help facilitate, oversee, and report to the United States regarding the divestiture” of the generic drug pravastatin. Glenmark also agreed to divest its rights to sell and distribute pravastatin but does not seem to require an independent monitor.
Additionally, as part of its settlement, Teva admitted to participating in three antitrust conspiracies that impacted essential medicines, including pravastatin, clotrimazole, and tobramycin. Pravastatin is a common drug that is prescribed to lower the risk of heart disease and stroke; clotrimazole is often prescribed to treat skin infections; and tobramycin is often prescribed to treat eye infections and cystic fibrosis. Glenmark admitted to participating in a conspiracy to fix the price of pravastatin.
The agreements would defer prosecution and trial on the filed charges for the three-year terms of the agreements, or until after the criminal penalties are paid, whichever is later. The agreements are subject to approval by the Court. With these two agreements, all seven companies (including Teva, Glenmark, Apotex, Taro, Sandoz) implicated in the investigation by the DOJ have resolved their criminal charges, resulting in more than $681 million in criminal penalties.
The Government notes in the DPA that while Teva’s parent company Teva Pharmaceutical Industries Ltd. entered into a DPA in 2016 to resolve Foreign Corrupt Practices Act (FCPA) violations, and while the DOJ “generally disfavors multiple deferred prosecution agreements,” this settlement and DPA is “appropriate given that the matters at issue in the 2016 resolution did not involve recent or similar types of misconduct; the same personnel, officers, or executives; or the same entities.”
“Today, the Antitrust Division and our law enforcement partners hold two more pharmaceutical companies accountable for raising prices of essential medicines and depriving Americans of affordable access to prescription drugs. The resolutions include extraordinary remedial measures that require the breakup of assets and restore competition to the industry,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “Companies in heavily regulated industries are on notice that the division will not hesitate to hold them accountable and will not tolerate recidivism.”