Deal-minded Pfizer checked out Mylan's price-fixing probe, report says. Upshot? No red flags

Pfizer building
Pfizer this week signed a deal to join its Upjohn unit with generic drug giant Mylan for a planned 2020 spinoff. (Tracy Staton)

Mylan faces federal and state investigations into alleged price-fixing, but the industrywide probe apparently wasn't enough to alarm Pfizer as it negotiated a merger with the generics player. 

After announcing that its Upjohn unit would link up with Mylan for a 2020 spinoff, Pfizer CEO Albert Bourla told Bloomberg his company “assessed that the defense exposure is a reasonable exposure” and that there “were no issues to proceed.” The company told Bloomberg its analysis covered Mylan’s potential liabilities as a company, not for any executives. 

Mylan President Rajiv Malik, who was named in a high-profile price-fixing lawsuit brought by states in 2017, will stick around at the combined company after the merger. So will Mylan’s executive chairman Robert Coury, who isn't among the named defendants in that case.

Throughout the probe, Mylan has stood by its president. The company said in a securities filing it believes claims brought by state attorneys general are “without merit” and that it intends to “defend against them vigorously.”

Even more recently, more than 40 states sued 20 drugmakers and numerous executives with “undeniable” evidence of price-fixing, as described by Connecticut attorney general William Tong.

But the federal probe appears to be struggling. In a Tuesday report, Bloomberg says prosecutors have had trouble getting key witnesses and companies to participate.

One cooperating witness committed suicide, Bloomberg reports, and several generic drug industry executives stood firm against surprise FBI visits. Now, there’s an added urgency because the five-year statute of limitations for criminal charges will expire next year. After that, prosecutors could only pursue civil claims.

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RELATED: Mylan President Rajiv Malik targeted as states expand price-fixing suit against top drugmakers 

Sources told Bloomberg that Mylan has been among the least cooperative targets in the probes, a statement Mylan disputed. In an annual report, Mylan says it’s “fully cooperating” with the DOJ investigation. The company acknowledges that “related search warrants also were executed.”

But setbacks in the federal investigation haven't come from a lack of effort. The Bloomberg report details the prosecutors' work to file subpoenas and gain info from surprise raids, including one on Mylan's headquarters in September 2016, just as CEO Heather Bresch was testifying in Congress about EpiPen price hikes. The company surrendered some emails, but a team of lawyers was able to get the FBI to leave without accessing Bresch’s office, according to the news service.  

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

Bresch is set to retire when Mylan combines with Upjohn next year, stepping away from Mylan after a stretch of eight years that's featured numerous scandals and big growth. In recent years, the drugmaker’s stock price has tumbled, triggering investor angst over management, according to analysts.

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