Feds Charge Sandoz for Fixing Generic Drug Prices

The Department of Justice recently announced that it has charged generic pharmaceutical company Sandoz Inc. for fixing generic drug prices, rigging bids, and other antitrust conspiracies.

Today’s case is the seventh to be filed in the Antitrust Division’s ongoing investigation into the generic pharmaceutical industry and Sandoz is the third pharmaceutical company to be charged, the announcement added. 

“Today’s resolution, with one of the largest manufacturers of generic drugs, is a significant step toward ensuring that prices for generic drugs are set by competition, not collusion, and rooting out antitrust crimes that cheated American purchasers of vital medicines,” Attorney General Makan Delrahim of the DOJ’s Antitrust Division, said in a statement. 

According to court documents, Sandoz allocated customers, rigged bids, and fixed prices for generic drugs between 2013 and 2015. The company disclosed that its sales affected by the charged conspiracies was more than $500 million. 

Sandoz entered a deferred prosecution agreement to resolve the charge. Per the agreement, the company will pay a $195 million criminal penalty and also admit to the monetary damages identified by the federal government.

Sandoz also admitted that it participated in an antitrust conspiracy with four companies including a generic company based in New York which affected drugs including clobetasol, desonide ointment, and nystatin triamcinolone cream. 

The company also conceded that it was involved in an antitrust conspiracy with Kavod Pharmaceuticals to allocate customers and fix prices of benazepril HCTZ. Kavod Pharmaceuticals LLC has already been charged for its role and entered into a deferred prosecution agreement in December 2019.

Other charges Sandoz admitted to included its roles in a conspiracy with a generic drug company based in Michigan, with affected drugs including desonide ointment, and a conspiracy with a generic drug company based in Pennsylvania, which affected drugs including tobramycin inhalation solution.

“Sandoz conspired for years with other manufacturers and their executives to raise prices for critical medications, and the Antitrust Division will continue its ongoing investigations to hold both individuals and corporations accountable for these crimes,” Delrahim continued.

Under the deferred prosecution agreement, Sandoz will cooperate fully with the division. The parties will also file a joint motion, which is subject to approval by the Court, to defer for the term of the agreement any prosecution and trial of the charges filed against the defendant, the announcement highlighted. 

The decision will further the legal and investigative teams’ efforts in ensuring a free and open marketplace for the competitive pricing of generic drugs. 

“When a pharmaceutical company participates in bid-rigging and price-fixing, the entire community suffers,” US Attorney William M. McSwain for the Eastern District of Pennsylvania, said in a statement. “My office will continue to work with the Department of Justice and all of our law enforcement partners to ensure that prices for medicine are set legally, and not through illegal means to benefit pure greed.” 

Four individuals have been charged in this case including three executives such as Hector Armando Kellum, Sandoz executive, and Ara Aprahamiam, a former executive of a company based in New York.

“We will not turn a blind eye while companies and executives pad their pocketbooks. The FBI will continue to fight for the public to have access to a competitive marketplace of medications that Americans can count on,” Timothy M. Dunham, special agent in charge of the FBI Washington field office’s criminal division, said in a statement.