Glenmark Pharmaceuticals to Pay $25 Million in Price-Fixing Scheme
The U.S. Attorney’s Office for the Eastern District of Pennsylvania announced on Wednesday, that Glenmark Pharmaceuticals Inc., USA, has agreed to pay $25 million to resolve allegations under the False Claims Act (FCA) that it conspired to fix the price of the generic cholesterol-lowering drug pravastatin. The government alleged Glenmark violated the Anti-Kickback Statute between 2013 and 2015, by paying and receiving prohibited payments on “price, supply and allocation of customers” relating to the generic that is commonly used to treat high cholesterol and triglyceride levels.
U.S. Attorney Jacqueline C. Romero remarked, “At a time when excessive drug costs are already imposing unprecedented burdens on our country’s vulnerable citizens, an illegal conspiracy to fix the prices of generic drugs is alarming.” The settlement reflects the government’s commitment to holding companies accountable for actions that harm public health and violate federal laws.
Special Agent in Charge Maureen R. Dixon of the Department of Health and Human Services Office of the Inspector General (HHS-OIG) highlighted the impact on patients, noting that price-fixing could prevent patients from affording necessary medications: “Americans have the right to purchase generic drugs set by fair and open competition, not collusion.” The Defense Criminal Investigative Service (DCIS) also played a crucial role in the investigation, focusing on protecting the integrity of TRICARE, the healthcare system for U.S. military members and their dependents.
The False Claims Act is a powerful tool used by the government to combat fraud against federal programs. In this case, Glenmark’s actions were alleged to have violated the Anti-Kickback Statute, which prohibits companies from receiving or making payments in return for arranging the sale or purchase of items reimbursed by federal healthcare programs. Glenmark had previously entered into a deferred prosecution agreement with the Antitrust Division of the U.S. Department of Justice on related criminal charges in which Glemark admitted to conspiring with two other drug companies to fix pravastatin prices. Glenmark paid a penalty in that matter of $30 million. These matters underscore the critical intersection between the False Claims Act and antitrust laws, particularly in the pharmaceutical industry where price-fixing can have severe repercussions on public health and federal healthcare programs.
This is not the first time that alleged anticompetitive conduct in violation of the antitrust laws formed the predicate for a False Claims Act case. For example, Constantine Cannon previously represented a whistleblower who brought a False Claims Act lawsuit against several South Korean oil companies for allegedly bid-rigging fuel contracts for U.S. military bases in South Korea. In that case, five different entities ended up paying a total of $363 million to settle the matter. It was the largest False Claims Act antitrust recovery as well as the largest False Claims Act settlement involving bid rigging to date. In November 2018, SK Energy Co. Ltd., GS Caltex Corporation, and Hanjin Transportation Co. Ltd. collectively agreed to pay $154 million to resolve civil claims, and an additional $82 million in criminal fines for their involvement in the conspiracy the whistleblower exposed. And in March 2019, the Department of Justice announced that two additional companies, Hyundai Oilbank Co. Ltd and S-Oil Corporation, would pay $75 million in criminal fines and $52 million to resolve these same False Claims Act and antitrust violations. The whistleblower received an award of nearly $37 million, representing 23% of the False Claims Act payments. Read more about that case here and here.
Anticompetitive arrangements that violate the antitrust laws — like price-fixing or bid-rigging agreements — are often secretive. Whistleblowers can play a key role in uncovering the misconduct. If you have any information of potential antitrust violations that directly impact government purchases and contracts, military contracting, or Medicare/Medicaid and would like to speak to an experienced member of the Constantine Cannon whistleblower lawyer team, please do not hesitate to reach out and contact us for a free and confidential consultation.