Generic drug manufacturers Teva Pharmaceuticals and Glenmark Pharmaceuticals have recently become the sixth and seventh drug makers to resolve criminal charges as a result of the Department of Justice (DOJ) yearslong investigation into generic drug price fixing. The settlement agreement commands both companies to pay substantial fines as well as divest their drug lines for pravastatin, a widely-used statin that lowers cholesterol.
The DOJ had shown its seriousness about cracking down on generic drug price fixing back in 2019, when two multimillion-dollar fines were issued to Heritage Pharmaceuticals and Rising Pharmaceuticals. The legal case central to this settlement dates back to 2020, when the DOJ indicted Teva over alleged price fixing conspiracies with four other generic drug makers – Glenmark, Sandoz, Apotex, and Taro Pharmaceuticals.
These pharmaceutical companies were charged with elevating prices, rigging bids, and allocating customers for generic drugs including pravastatin, as well as generic drugs for autoimmune diseases, pain, cancer and cystic fibrosis. In 2020, Taro, Sandoz and Apotex admitted their parts in these alleged schemes and collectively paid fines totaling $424.8 million. Pursuant to Monday’s settlement, Teva and Glenmark also admitted to their roles in the price-fixing scheme and agreed to pay their penalties.
The DOJ mandated Teva to pay a $225 million penalty, which the department cited as the largest fine to date for a domestic antitrust cartel. As for Glenmark, the DOJ leveled a $30 million fine. The settlement deal also requires both Teva and Glenmark to divest their respective drug lines for pravastatin, the nucleus of the companies’ alleged price fixing scheme.
Apart from the $225 million penalty, the DOJ ordered Teva to donate $50 million worth of drugs to humanitarian organizations. These drugs, clotrimazole (an antifungal medication) and tobramycin (an antibiotic drug), were affected by the conspiracy, as per the DOJ.
Failure to adhere to the terms of their settlement agreement by either company will lead to prosecution. If convicted, the companies would likely be prohibited from federal healthcare programs like Medicare and Medicaid, as stated by the DOJ.
In the words of Matt Stoller, director of research at the American Economic Liberties Project, an antitrust advocacy group, “When a firm is criminally convicted, it is barred from participating in U.S. federal healthcare programs.” Stoller went on to say that the correct response is to downsize the firm and compel it to disgorge illicit profits, which is what happened in this case.
In an issued press release, Teva stated that it “fosters a culture of compliance” and has “robust and consistent compliance controls in place” to forestall price fixing schemes from recurring in the future. Glenmark, however, did not respond to requests for comments.
As of 2019, Heritage agreed to pay more than $7 million to settle its price-fixing case, and Rising was hit with a penalty totaling more than $3 million. Altogether, seven drug makers have entered into agreements to pay almost $700 million as a result of the DOJ’s crackdown on generic drug price fixing.