Former Pharma Executive Pleads Guilty to Antitrust Conspiracy

The Department of Justice announced that a former generic pharmaceutical executive pled guilty last week for his role in criminal antitrust conspiracy from March 2013 to June 2015.

According to court documents, Hector Armano Kellum conspired to fix prices, rig bids, and allocate customers for generic drugs. His conspiracies affected products including clobetasol and nystatin triamcinolone cream.

“Kellum’s plea shows he lost sight of the basic principle that medicine is intended to heal sick people, not line an individual’s pockets by colluding to rig bids and manipulate drug prices,” Timothy R. Slater, assistant director in charge of the FBI Washington Field Office, said in a statement.

Kellum is the fourth executive to be charged in this ongoing investigation and the third to plead guilty. Two companies were also charged, including a generic pharmaceutical company headquartered out of New York, but the corporate charges were resolved by deferred prosecution agreement.

Additionally, Ara Aprahamian was also indicted in Philadelphia earlier this month. 

Kellum and his co-conspirators targeted the elderly, one of the most vulnerable populations in the US. 

“With today’s guilty plea, the Antitrust Division continues its prosecution of high-ranking executives who conspired to cheat America’s most vulnerable elderly consumers by raising prices for vital drugs,” Attorney General Makan Delrahim of the DOJ’s Antitrust Division, said in a statement.

The penalty for Kellum’s violation is a maximum of ten years in prison and 1 million in criminal fines.

Kellum has agreed to cooperate with the Antitrust Division’s ongoing investigation into criminal antitrust violations in the generic drug industry.

“Competition in our healthcare system is a critical focus for the Antitrust Division and rooting our collusion by executives is a key priority in keeping our markets free,” Delrahim explained.

Scott Pierce, US Postal Service Office of Inspector General emphasized that they will continue to “aggressively” investigate the individuals in question along with the DOJ and the Federal Bureau of Investigation.  

“The FBI and our partners will continue to fight for the American public to have access to a competitive marketplace for pharmaceuticals. We will not stand by while large corporations and business executives in power try to skirt the rules at the expense of unsuspecting citizens,” Slater concluded. 

The DOJ recovered over $3 billion from False Claims cases in the 2019 fiscal year, with $2.6 billion coming from healthcare fraud schemes.

The fraud cases involved a wide range of stakeholders, drug and medical manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians. 

“The significant number of settlements and judgments obtained over the past year demonstrate the high priority this administration places on deterring fraud against the government and ensuring that citizens’ tax dollars are well spent,” Assistant Attorney General Hunt said at the time.