3 Pharmaceutical Companies Accused of Drug Price Fixing to Pay $447.2 Million

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Pharmaceutical Price Fixing Settlement Overview: 

• Who: Taro Pharmaceuticals USA Inc., Sandoz Inc. and Apotex Corp. settled alleged violations of the False Claims Act arising from conspiracies to fix the price of various generic drugs.
• Why: The price-fixing allegedly resulted in higher drug prices for federal health care programs and beneficiaries.
• Where: The lawsuits were filed in Pennsylvania federal court.

Generic pharmaceutical manufacturers Taro Pharmaceuticals USA, Inc., Sandoz Inc. and Apotex Corporation have agreed to pay a total of $447.2 million to resolve alleged violations of the False Claims Act arising from conspiracies to fix the price of various generic drugs. These conspiracies allegedly resulted in higher drug prices for federal health care programs and beneficiaries, according to the US Department of Justice.

Prosecutors allege that between 2013 and 2015, all three companies paid and received compensation prohibited by the Anti-Kickback Statute through arrangements on price, supply and allocation of customers with other pharmaceutical manufacturers for certain generic drugs manufactured by the companies.

Taro has agreed to pay a settlement of $213.2 million. The Taro drugs allegedly implicated in this scheme address a wide variety of health conditions and include etodolac, a nonsteroidal anti-inflammatory drug used to treat pain and arthritis, and nystatin-triamcinolone cream and ointment, a combination of an antifungal medicine and steroid used to treat certain kinds of skin infections.

Sandoz has agreed to pay out $185 million. The Sandoz drugs at issue include benazepril HCTZ, used to treat hypertension, and clobetasol, a corticosteroid used to treat skin conditions.

Apotex has agreed to pay $49 million in connection with its sale of pravastatin, a drug used to treat high cholesterol and triglyceride levels.

“Illegal collaboration on the price or supply of drugs increases costs both to federal health care programs and beneficiaries,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “The department will use every tool at its disposal to prevent such conduct and to protect these taxpayer-funded programs.” 

In connection with its settlement agreement, each company also entered a five-year corporate integrity agreement with the Office of Inspector General (OIG). The agreements include unique internal monitoring and price transparency provisions. They also require the companies to implement compliance measures including risk assessment programs, executive recoupment provisions and compliance-related certifications from company executives and board members.

“These kickback schemes harm Medicare, Medicaid and patients,” said Gregory E. Demske, chief counsel for the Inspector General for the U.S. Department of Health and Human Services. “The agreements promote transparency and accountability by requiring the companies to report price-related information to OIG and mandating individual certifications by key executives involved in pricing and contracting functions.”

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Apotex is represented by Steven F. Cherry and April N. Williams of Wilmer Cutler Pickering Hale and Dorr LLP and James W. Matthews of Foley & Lardner LLP. Taro is represented by Jeffrey Green of Sidley Austin LLP. Sandoz is represented by Mark T. Calloway and Teresa T. Bonder of Alston & Bird LLP. 

The Pharmaceutical Price-Fixing Settlements are United States v. Sandoz Inc., Case No. 2:20-cr-00111-RBS, in the United States District Court for the Eastern District of Pennsylvania; United States v. Taro Pharmaceuticals U.S.A., Inc., Case. No. Case 2:20-cr-00214-RBS, in the United States District Court for the Eastern District of Pennsylvania; and United States v. Apotex Corp., Case No. 2:20-cr-00169-RBS, in the United States District Court for the Eastern District of Pennsylvania.

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