The Department of Justice just announced deferred prosecution agreements resolving criminal antitrust charges against Teva Pharmaceuticals USA, Inc. and Glenmark Pharmaceuticals Inc., USA. As part of those agreements, both companies will divest a key business line involved in the misconduct, and as an additional remedial measure,
Teva will make a $50 million drug donation to humanitarian organizations. Teva will pay a $225 million criminal penalty – the largest to date for a domestic antitrust cartel – and Glenmark will pay a $30 million criminal penalty. Both companies will face prosecution if they violate the terms of the agreements, and if convicted, would likely face mandatory debarment from federal health care programs.
The agreements each require the companies to undertake remedial measures, including the timely divestiture of their respective drug lines for pravastatin, a widely used cholesterol medicine that was a core part of the companies’ price-fixing conspiracy. This extraordinary remedy forces the companies to divest a business line that was central to the misconduct.
Teva must also donate $50 million worth of clotrimazole and tobramycin, two additional drugs with prices affected by Teva’s criminal schemes, to humanitarian organizations that provide medication to Americans in need.
Both Teva and Glenmark have agreed, among other things, to cooperate with the department in the ongoing criminal investigations and resulting prosecutions, report to the department on their compliance programs, and modify those compliance programs where necessary and appropriate.
As part of the agreements, Teva admitted to participating in three antitrust conspiracies that affected essential medicines – including pravastatin, clotrimazole and tobramycin – and Glenmark admitted to participating in a conspiracy to fix the price of pravastatin. Pravastatin is a commonly prescribed cholesterol medication that lowers the risk of heart disease and stroke; clotrimazole is commonly prescribed to treat skin infections; and tobramycin is commonly prescribed to treat eye infections and cystic fibrosis.
Also as part of the agreements, the parties filed joint motions, which are subject to approval by the Court, to 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 occurs later.
During the multi-year investigation, the Antitrust Division and its law enforcement partners uncovered price-fixing, bid-rigging and market-allocation schemes affecting many generic medicines, and charged seven generic pharmaceutical companies for their participation in the schemes. With these newest agreements, all seven companies have resolved their criminal charges and collectively agreed to pay more than $681 million in criminal penalties.
In June 2020, Glenmark was charged with one count of price fixing for its role in a conspiracy affecting the prices of pravastatin and other generic drugs. A grand jury returned a superseding indictment against Glenmark and Teva in August 2020 for the same and similar conduct. Count one alleged that Teva conspired with Glenmark, Apotex Corp. and others to increase prices for pravastatin and other generic drugs. Apotex admitted its role in this conspiracy and agreed to pay a $24.1 million penalty in May 2020.
Count two charged Teva for its role in a conspiracy with Taro Pharmaceuticals U.S.A. Inc., its former executive Ara Aprahamian and others to increase prices, rig bids and allocate customers of generic drugs, including clotrimazole, a medicine used to treat skin infections. Taro admitted to its role in this conspiracy and agreed to pay a $205.7 million penalty to resolve that charge in July 2020. Aprahamian was indicted in February 2020 and is awaiting trial.
Count three charged Teva for its role in a conspiracy with Sandoz Inc. and others to increase prices, rig bids and allocate customers of generic medicines, including cystic fibrosis medicine tobramycin. A former Sandoz executive pleaded guilty for his participation in the conspiracy in February 2020. Sandoz admitted to its role in the conspiracy and agreed to pay a $195 million penalty in March 2020.