Federal prosecutors snare 3rd generics exec in price-fixing investigation

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Former Taro exec Ara Aprahamian was charged with conspiring to fix prices and lying to investigators. (Pixabay)

In a long-running price-fixing probe into some of the generics industry's biggest players, federal prosecutors have seen modest returns so far for their efforts. But now, a third generics exec is facing charges, and more could be on the way as a massive lawsuit moves through the courts.

Pennsylvania federal prosecutors on Tuesday charged Ara Aprahamian, a former sales executive at Taro Pharma, on three counts of conspiring to fix prices for the company's generic drugs and lying to investigators, the Department of Justice said in a statement. 

Aprahamian was targeted for his stints as VP of marketing and VP of sales and marketing between 2013 and 2016, during which he spearheaded two separate price-fixing campaigns with unnamed drugmakers in New Jersey and Pennsylvania then later lied about his role in the schemes, prosecutors said. 

The conspiracy charges come with a maximum penalty of 10 years in prison and $1 million in fines, prosecutors said. The third count of lying to investigators carries a penalty of five years in prison and a $250,000 fine. 

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

Aprahamian is now the third generics executive charged in connection with the wide-ranging price-fixing probe, which netted a settlement with two generics execs in 2017. In January of that year, Jeffrey Glazer and Jason Malek, the former CEO and president of Heritage Pharmaceuticals, respectively, inked deals to settle federal price-fixing charges leveled the month before.

In exchange for their guilty pleas, Glazer and Malek agreed to turn state's witnesses in Connecticut federal court. 

Prosecutors have also brought cases against two New Jersey-based drugmakers—including Heritage—for their roles in price-fixing schemes, U.S. Attorney William McSwain said in a statement.

In those cases, Rising Pharmaceuticals agreed in December to pay $3 million in exchange for a guilty plea in a scheme to set prices for hypertension med Benazepril HCTZ. Heritage reached a deal in March to pay $7 million to cooperate with the feds in their probe. 

RELATED: Teva starred in price-fixing scheme, but 19 other companies 'willingly' joined, attorneys general claim

With the dominoes starting to fall in the feds' yearslong collusion probe, even bigger players––including Pfizer, Mylan and Teva––could find themselves in the firing line with a massive state-driven lawsuit moving through the courts.

In May, 44 states launched a mammoth case against 20 generic drugmakers that Connecticut Attorney General William Tong called "the largest cartel case in the history of the United States."

At industry dinners, cocktail parties and outings—and in follow-up phone calls and texts—the companies divvied up markets and agreed on prices, the 524-page complaint alleges. And though Teva played a starring role, each of the other defendants “willingly participated” and “reaped substantial monetary rewards,” the suit (PDF) claimed.

The suit directly named Maureen Cavanaugh, Teva's former senior vice president and chief commercial officer in North America, and three lower-level executives who no longer work at the company. Aside from Teva, the lawsuit implicates Novartis’ Sandoz unit, Mylan, Pfizer and several other leading generic drug makers. It names current and former executives from Lupin, Glenmark and other companies. 

After five years of investigating, the states identified more than 100 drugs for which they allege defendants illegally divided up markets and fixed prices. In some cases, price hikes that stemmed from backroom conversations were more than 1,000%, Tong said. The scheme covered a wide array of drug types and classes, including treatments for multiple sclerosis, HIV, ADHD and cancer.

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