DOJ Criminal Generic Pharma Price-Fixing Investigation Gathers Steam: Taro Pharmaceuticals Agrees to Pay DOJ Total of $419 Million

Michael Volkov
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The Volkov Law Group

The DOJ Antitrust Division’s multi-year criminal cartel investigation of the generic pharmaceutical industry is gaining steam.  The latest company to settle is Taro Pharmaceuticals which agreed to enter a deferred prosecution agreement and pay a $205.7 million penalty to resolve charges relating to a criminal price-fixing conspiracy.  The Antitrust Division’s settlement with Taro is the 10th case, and the 6th company to be charged or resolve criminal charges. 

Taro also agreed to pay DOJ’s Civil Division 213.3 million to resolve civil claims stemming from its participation in two criminal price-fixing conspiracies.

DOJ’s investigation picked up significant momentum when it settled charges against Sandoz, a large generics manufacturer, which agreed to pay $195 million and cooperate with the investigation.  Taro is alleged to have participated in two separate conspiracies with Sandoz, a competitor.

Two other companies, Rising Pharmaceuticals and Heritage Pharmaceuticals Inc. entered into deferred prosecution agreements last year.

Apotex was the most recent generic-drug maker to cut a deal connected to the probe, agreeing to pay a $24 million criminal penalty in May 2020 over allegations related to pravastatin.

Last month the DOJ indicted Glenmark Pharmaceuticals Inc. of collecting $200 million in overcharges for cholesterol treatment pravastatin and other drugs through illegal cartel agreements with competing generic pharma companies. Glenmark vowed to fight the charges. 

Taro agreed that it had earned more than $500 million in sales related to its illegal conduct and agreed to cooperate in the ongoing probe.  Taro’s cartel activity related to generic pharmaceuticals used to treat seizures, bipolar disorder, pain and arthritis.

Former Taro executive Ara Aprahamian was indicted in February 2020 for his role in the price-fixing conspiracy related to antibiotics.  He is awaiting trial.  Three other executives plead guilty, including Hector Armando Kellum from Sandoz. 

Taro, Aprahamian and others are accused of conspiring with Sandoz from March 2013 to December 2015 to fix prices, allocate customers and rig bids for numerous generic drugs.  Sandoz is a division of Novartis, which has certainly had its fill of DOJ prosecutions – recently for FCPA, False Claims Act and Anti-Kickback violations.

Taro also admitted participating in a second conspiracy with another generic company based in Pennsylvania between May 2013 and December 2015. 

State Attorneys General, along with private parties, have ongoing civil cases challenging numerous companies in the generic pharmaceutical industry for illegal price-fixing and cartel activities involving dozens of drugs

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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