Sandoz and its subsidiary Fougera Pharmaceuticals recently announced a $265 million settlement with a class of direct drug purchasers – including CVS and Walgreens. The settlement stems from an investigation by the United States Department of Justice (DOJ) into generic drug manufacturers regarding illegal price fixing.
The investigation was initially launched by Connecticut Attorney General William Tong in 2017 and led to many lawsuits filed, which were consolidated into this one action. The initial lawsuit alleged a “widespread conspiracy by generic drug manufacturers to artificially inflate and manipulate prices, reduce competition, and unreasonably restrain trade for generic drugs sold across the US,” with a focus on dermatological topical medicines. Tong alleged that the companies cited in the lawsuit used a variety of tactics – including phone calls, text messages, emails, conventions, and dinner parties – to fix prices and restrain competition. He went on to allege that the involved companies took steps – including using code words – to avoid being detected.
Individual direct purchasers have the right to opt out of the settlement, which may reduce the settlement amount by up to 12%, or $31.8 million. The settlement may be terminated if opt-outs reach a certain threshold.
As we often see in these types of settlements, it does not include any admission of wrongdoing by Sandoz. Additionally, the agreement is subject to court approval. If approved, class members would then be notified and given the option to opt out, object, or file a claim in the settlement.
Sandoz recently became an independent company in October 2023, after spinning off as a division of Novartis. “As a new public company, this settlement underscores the Sandoz commitment to integrity and sound governance, and is an encouraging step toward putting allegations of legacy conduct behind us”, it said in its statement.
Related Matters
The allegations covered by this settlement date back to when Sandoz was part of Novartis Group. Novartis/Sandoz already reached settlements for two similar antitrust lawsuits against the division in 2020 and 2021, for a total of roughly $380 million.
This settlement is separate from two other remaining cases, which involve indirect and downstream purchases and damages claims under state law. “Sandoz U.S. continues to defend itself vigorously in those cases, and has raised a number of defenses, including whether downstream purchasers were actually damaged due to the alleged conduct,” Sandoz said in a statement.