US files first charges in generic-drug antitrust investigation

The US Department of Justice (DOJ) stated Wednesday that it filed the first criminal charges tied to a broad two-year investigation into suspected price collusion in the generic-drug industry. Citing court documents unsealed in the US District Court for the Eastern District of Pennsylvania, the department said former Heritage Pharmaceuticals CEO Jeffrey Glazer, as well as Jason Malek, an ex-president of the company, each face two counts of conspiring to fix prices, rig bids and allocate customers for the antibiotic doxycycline, and conspiring to fix prices and allocate customers for the diabetes drug glyburide. 

"By entering into unlawful agreements to fix prices and allocate customers, these two executives sought to enrich themselves at the expense of sick and vulnerable individuals who rely upon access to generic pharmaceuticals as a more affordable alternative to brand-name medicines," commented Deputy Assistant Attorney General Brent Snyder of the DOJ's antitrust division. Snyder added "these charges are an important step in correcting that injustice and in ensuring that generic pharmaceutical companies compete vigorously to provide these essential products at a price set by the market, not by collusion." 

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According to the DOJ, the alleged antitrust activities into both drugs continued until at least December 2015, with the doxycycline conspiracy taking place from as early as 2013, while the collusion into glyburide started from as early as 2014.

Meanwhile, Heritage filed a civil lawsuit last month against Glazer and Malek, who were fired in August, accusing them of stealing millions of dollars from the company over at least a seven-year period. "Glazer and Malek accomplished this brazen theft by creating at least five dummy corporations, which they used to siphon off Heritage's profits through numerous racketeering schemes," the litigation contends, including "secretly [arranging]deeply discounted sales of Heritage products to their dummy corporations or through complicit third parties willing to act as straw buyers in return for bribes," and then illegally pocketing the profit that resulted when customers paid the market price for the drugs.

Bloomberg, citing people familiar with the matter, has reported that the federal antitrust probe is looking into more than a dozen companies and about two dozen drugs, with Teva and Mylan among those that have received subpoenas. Bloomberg said other companies involved in the investigation include Actavis, which Allergan recently sold to Teva, Lannett, Impax Laboratories, Covis Pharma, Sun Pharmaceutical, Mayne Pharma, Endo International and Taro Pharmaceutical.

In 2014, US lawmakers asked Heritage and 13 other companies to provide "information about the escalating prices" of their generic drugs. For related analysis on drug pricing in the US, see ViewPoints: Innovators could be biggest losers of DOJ probe into generic drug pricing. See also Spotlight On: Public, political winds blowing against drug industry



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