Heritage reaches settlement with US on drug price-fixing allegations

Heritage Pharmaceuticals on Friday announced that it has agreed to pay more than $7 million in criminal penalty and civil damages to the US government to resolve accusations that it fixed the prices of several drugs, including the diabetes treatment glyburide. Specifically, Heritage entered into a deferred prosecution agreement (DPA) with the US Department of Justice (DOJ) under which the company admits that it conspired to fix prices, rig bids and allocate customers for glyburide. The drugmaker also agreed to a separate settlement with the DOJ to pay $7.1 million to resolve potential civil liability in connection with the price-fixing conspiracy.

Assistant Attorney General Makan Delrahim remarked "Heritage and its co-conspirators cheated and exploited vulnerable American patients to pad their bottom line." He added "this resolution, requiring an admission of guilt, a criminal penalty, and cooperation in the ongoing investigation, sends a clear message to generic pharmaceutical companies and their executives that this conduct will not be tolerated."

US authorities accused Heritage of conspiring with other companies to fix and maintain the price of glyburide from April 2014 until at least December 2015, including meetings and conversations in which the drugmaker agreed to pricing strategies with its co-conspirators. Under the DPA, which includes a criminal penalty of $225 000, Heritage has agreed to cooperate with ongoing parallel investigations in the generics industry, while the DOJ will delay prosecuting Heritage for three years to allow the company to comply with the settlement terms.

In the separate civil resolution, the government alleged that between 2012 and 2015, Heritage paid and received remuneration through arrangements on price, supply and allocation of customers with other pharmaceutical manufacturers for certain generic drugs and that its sale of such products resulted in claims submitted to or purchases by federal healthcare programmes. According to the DOJ, drugs allegedly implicated in this scheme included glyburide, the hypertension treatment hydralazine, and the asthma therapy theophylline.

The agreement comes after the DOJ charged former Heritage CEO Jeffrey Glazer and ex-president Jason Malek each with two counts of conspiring to fix prices for glyburide and the antibiotic doxycycline. Heritage noted that both executives, who pleaded guilty to the allegations in 2017, were terminated soon after their involvement in the antitrust scheme was discovered.

"We are pleased to put these issues behind us and focus on Heritage's future," said current CEO William Marth, continuing "in the years since the conduct occurred, Heritage has revamped its leadership team, strengthened its operations, and built a robust pipeline of future products that will expand the availability of generic pharmaceuticals for consumers."

The accord marks the first settlement reached as part of DOJ’s probe of price fixing in the generic drug sector. Meanwhile, a lawsuit filed by 20 US states in 2016 accusing multiple generic drugmakers, including Heritage, of conspiring to fix the prices of more than 100 therapies, was recently expanded, with more than 40 states now joining the litigation.   

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