DOJ Settles Criminal Antitrust Charges with Teva and Glenmark for $305 Million

The Antitrust Division has been active – like any aggressive prosecution strategy, however, its results have been mixed.  Its record in criminal cases has taken serious hits – a stunning set of losses in the chicken price-fixing cases and defeats in criminal labor market cases.

DOJ has been quietly and steadily building cases in the generic pharmaceutical industry.  DOJ’s most significant criminal case charged both Teva Pharmaceuticals USA and Glenmark with criminal violations.  While the case was heading towards trial, the parties agreed to resolve the criminal case.  When you look at it, the companies faced a serious potential consequence – if convicted, they could be excluded from participating in all federal healthcare programs, meaning Medicare, Medicaid and related programs.  That is a huge consequence. 

DOJ did not require either company to enter a guilty plea – instead, the companies agreed to Deferred Purchase Agreements (“DPAs”).  The terms of the DPAs, however, contain some interesting requirements.

Teva agreed to pay a fine of $225 million and Glenmark agreed to pay $30 million.  DOJ’s $225 million settlement with Teva was a record high for a domestic cartel prosecution. Also, Teva was required to donate $50 million in drugs to humanitarian organizations.  Interestingly, both companies, as part of a criminal settlement, were required to divest their respective drug lines for pravastatin, a popular cholesterol medicine that was a core part of the companies’ price-fixing conspiracy.

Teva admitted to participating in three conspiracies involving pravastatin, clotrimazole (used to treat skin infections) and tobramycin (used to treat eye infections and cystic fibrosis).  Glenmark admitted to participating in a conspiracy involving pravastatin.

With the recent resolutions, DOJ’s antitrust investigation of the generic pharmaceutical industry netted seven generic pharmaceutical companies for collective criminal penalties of $681 million. Teva, Glenmark and Apotex Corp. were charged in one count together in an indictment for their roles in a criminal conspiracy to increase prices for pravastatin and other generic drugs.  Apotex admitted its role in the conspiracy and agreed to pay $24.1 million penalty.

In the second count of the indictment, Teva was charged with Taro Pharmaceuticals USA, and its former executive Ara Aprahamian and others to increase prices, rig bids and allocate customers of generic drugs, including clotrimazole. Taro admitted to its role in the conspiracy and agreed to pay a $205.7 million penalty. Aprahamian was indicted in February 2022 and is pending trial.

In the third count of the indictment, Teva was charged for its role with Sandoz and others to increase prices, rig bids and allocate customers of tobramycin.  A former Sandoz executive plead guilty for his role in the conspiracy.  Sandoz admitted its role in the conspiracy and paid a $195 million penalty.

For Teva, this was its second DPA.  In 2016, Teva entered a DPA requiring payment of $516 million for FCPA violations.  DOJ granted Teva a second DPA, which is highly unusual, to settle the antitrust case.

Under the DPAs, Teva and Glenmark are required to implement remedial measures including the divestiture of pravastatin, enhance their corporate compliance programs and submit reports to DOJ  on its compliance program.

You may also like...