Antitrust Law Daily Heritage Pharmaceuticals charged in U.S. probe of diabetes treatment price fixing
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Friday, May 31, 2019

Heritage Pharmaceuticals charged in U.S. probe of diabetes treatment price fixing

By Jeffrey May, J.D.

Charge against generic drug company follows plea agreements from top company executives dating back to 2017. Heritage agrees to enter into deferred prosecution agreement.

Heritage Pharmaceuticals, Inc. has been charged by the Department of Justice Antitrust Division with participating in a conspiracy to fix prices, rig bids, and allocate customers for a generic drug used in the treatment of diabetes. The one-count felony charge was filed late yesterday in the federal district court in Philadelphia. Today, the Department of Justice Antitrust Division announced that Heritage has agreed to pay a $225,000 criminal penalty and $7.1 million in civil damages and to cooperate with ongoing parallel investigations in the generics industry (U.S. v. Heritage Pharmaceuticals, Inc., Case 2:19-cr-00316-RBS).

According to the charge, Heritage conspired with other companies and individuals engaged in the production and sale of generic pharmaceuticals to fix prices, rig bids, and allocate customers for glyburide. The alleged conduct took place from April 2014 until at least December 2015.

Deferred prosecution agreement. The Antitrust Division also announced a deferred prosecution agreement resolving the charge, under which Heritage Pharmaceuticals admits that it conspired to fix prices, rig bids, and allocate customers for glyburide. Under the agreement’s terms, Heritage will pay a $225,000 criminal penalty and cooperate fully with the ongoing criminal investigation. The United States will defer prosecuting Heritage for a period of three years to allow the company to comply with the agreement’s terms. The agreement will not be final until accepted by the court.

Earlier charges against company executives. This charge is the third in the Antitrust Division’s ongoing investigation, it was noted. Heritage’s former CEO, Jeffrey Glazer, and former president, Jason Malek, were charged in 2016. Glazer and Malek were also charged with conspiring to fix prices, rig bids, and allocate customers for an antibiotic, doxycycline hyclate. They entered guilty pleas in 2017.

State enforcement action. The company and executives also have been caught up in a multi-state antitrust enforcement action. Glazer and Malek agreed to settle those charges in 2017 and to cooperate with the ongoing state investigation, according to a May 2017 announcement from the State of Connecticut.

Violation of the Anti-Kickback Statute. The Justice Department also announced that, in a separate civil resolution, Heritage has agreed to pay $7.1 million to resolve allegations under the False Claims Act related to the price fixing conspiracy. Between 2012 and 2015, Heritage allegedly paid and received remuneration through arrangements on price, supply, and allocation of customers with other pharmaceutical manufacturers for a wide variety of generic drugs, including glyburide, in violation of the Anti-Kickback Statute. The Anti-Kickback Statute prohibits companies from receiving or paying remuneration in return for arranging the sale or purchase of items such as drugs for which payment may be made by a federal health care program, according to the Justice Department.

Companies: Heritage Pharmaceuticals, Inc.

MainStory: TopStory Antitrust AntitrustDivisionNews

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