Former Pharma Execs Face Felony Charges For Generic Drug Price-Fixing

Image courtesy of The.Comedian

Federal prosecutors have charged both the former CEO and president of a New Jersey pharmaceutical company with illegally conspiring to fix prices on generic drugs, marking the first time the Justice Department’s Antitrust Division has prosecuted a case involving generic medications, and could be the first domino in a series of charges still to come against others.

Until this past summer, Jeffrey Glazer and Jason Malek were the CEO and President, respectively, of Heritage Pharmaceuticals, a company specializing in generic prescription drugs, including the antibiotic doxycycline hyclate, and glyburide, a drug used to treat diabetes. Heritage is the U.S. subsidiary of Emcure Pharmaceuticals, which is based in Pune, India.

The DOJ alleges [Glazer PDF; Malek PDF] that, starting in 2013, the two executives conspiring with other individuals and companies — yet to be named by prosecutors — to fix prices on doxycycline hyclate and glyburide, by agreeing to not compete with each other for certain customers.

“By entering into unlawful agreements to fix prices and allocate customers, these two executives sought to enrich themselves at the expense of sick and vulnerable individuals who rely upon access to generic pharmaceuticals as a more affordable alternative to brand-name medicines,” said Deputy Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division. “These charges are an important step in correcting that injustice and in ensuring that generic pharmaceutical companies compete vigorously to provide these essential products at a price set by the market, not by collusion.”

The DOJ’s announcement of these charges seems to indicate that plea deals are in the works with these two executives, meaning there will likely be additional charges brought against the currently unnamed conspirators; and possibly against others not directly related to the drugs sold by Heritage.

As we mentioned in November, some companies — including bigger names like Teva, and EpiPen-maker Mylan — had received subpoenas as part of a sweeping DOJ investigation into price-fixing.

Bloomberg notes that, in addition to the criminal charges, both Glazer and Malek have been accused by Heritage — which fired the execs in August — of using multiple dummy corporations to allegedly steal company profits for their personal gain.

“Through one particularly audacious scheme, Glazer and Malek, together with other co-conspirators, secretly arranged deeply discounted sales of Heritage products to their dummy corporations or through complicit third parties willing to act as straw buyers in return for bribes,” notes the civil suit brought by Heritage against the two men.