Ex-Heritage execs turn state's evidence in far-reaching generic pricing probe

Justice statue with sword and scales
Two former Heritage Pharma execs agreed to cooperate with a broad generic price collusion probe.

The price-fixing probe hanging over the generic drug industry gained new strength on Wednesday as two former Heritage Pharma execs agreed to cooperate with investigators.

Heritage Pharma’s former CEO, Jeffrey Glazer, and former president Jason Malek inked settlements to pay $25,000 and cooperate with the ongoing investigation, which has roped in some of the biggest names in the generics business, according to the office of Connecticut Attorney General George Jepsen.

As authorities dig into the industry’s pricing practices, Glazer and Malek’s cooperation “will significantly strengthen our ability to prosecute the litigation and further our investigation," Jepsen said.

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Forty-one states and territories are involved in the investigation, as well as the U.S. Department of Justice. Connecticut is leading the probe after kicking off its inquiry back in July 2014, according to the release.

The probe has already triggered a pending lawsuit against six generic drug companies alleging a “well-coordinated and long-running conspiracy to fix prices and allocate markets” on the antibiotic doxycycline hyclate and on the oral diabetes drug glyburide, according to Jepsen’s office. Among those companies are giants Mylan and Teva Pharmaceutials, as well as Mayne Pharma and Aurobindo Pharma.

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In its most recent quarterly filing, Mylan disclosed that it’s been subpoenaed by the Justice Department for “information relating to the marketing, pricing, and sale of our generic” doxycycline. The DOJ also seeks info about “any communications with competitors about such products,” according to Mylan’s filing.

News of the probe broke late last year, when Bloomberg reported that about a dozen companies were under investigation for pricing collusion. In addition to Mylan, Teva and the other doxycycline defendants, the probe involves companies such as Lannett and Impax Laboratories, according to public filings.

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Analysts have said the liabilities for Mylan and Teva could total in the hundreds of millions of dollars.

The first executives to be charged as part of the episode, Glazer and Malek entered plea agreements with the DOJ in December. In this case, charges apparently will not be limited to corporations but could extend to management, as officials move to hold individuals accountable for their business decisions.