Generic drugmakers scrutinized for alleged False Claims Act violations related to price-fixing

10 July 2018 2:06pm

6 July 2018. By Joshua Sisco.

The US government’s years-long criminal antitrust investigation of generic drug companies has expanded to include a federal probe into possible False Claims Act violations predicated on price-fixing, MLex has learned.

In the past several months, a subset of the drugmakers scrutinized by prosecutors with the Department of Justice’s antitrust division also received civil investigative demand letters from the DOJ’s civil division, it is understood.

The False Claims Act allows for prosecution and monetary recovery against people and companies that defraud government programs. Most of the cases are brought by whistleblowers, though the DOJ does initiate its own investigations.

A number of government agencies and programs are large purchasers of pharmaceuticals, including Medicare and Medicaid, as well as the Department of Veterans Affairs.

The CIDs are understood to focus on the same conduct as the antitrust division’s price-fixing investigation, and include questions about competitor contacts and prices. The civil division, which prosecutes False Claims Act violations, is investigating the possibility that companies fixing prices of generic drugs defrauded government purchasers with anticompetitive prices.

Medicare, the US insurance program for Americans older than 65, buys about 29 percent of all prescription drugs sold in the country each year.

In January, antitrust division Assistant Attorney General Makan Delrahim said that prosecutors in that division could join civil damages litigation against the generic drug makers.

“We are examining and working very closely with our federal agency counterparts where the federal government has been a victim,” Delrahim said at the time. “We have a criminal investigation that’s very broad in the generic pharmaceutical industry. To the extent taxpayers have had to pay that bill, I think the taxpayers should recover. We will get involved on the civil side and recover damages for the US government.”

The civil and antitrust divisions are two separate litigating sections at the Justice Department, and each division could bring charges under different laws. The extent to which the two divisions are cooperating, if at all, is not known.

It is not known which companies received CIDs related to the false claims investigation.

A spokesperson for the DOJ declined to comment.

The Justice Department has been investigating allegations of price-fixing in the generic pharmaceutical industry since at least 2014, and companies including Teva Pharmaceuticals, Perrigo, Mylan, Sun Pharmaceutical Industries, Dr. Reddy’s Laboratories and Actavis have received grand jury subpoenas.

To date, criminal charges have only been brought against two executives from New Jersey-based Heritage Pharmaceuticals, which is owned by India-based Emcure.

Private plaintiffs, as well as the attorneys general for 46 states, have also filed civil antitrust complaints seeking damages for alleged price-fixing of dozens of drugs.

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