A wide-ranging federal probe into the generics industry's alleged scheme to fix drug prices has already netted settlements from a few major drugmakers. With one of its sales execs already working with the government, Taro Pharma will now turn state's witness—and pay a hefty criminal fine.
Taro will pay out a combined $419 million to settle claims it engaged in an industrywide scheme to fix the price of a range of generic medicines, the drugmaker said in a Thursday release.
The U.S. Department of Justice (DOJ) agreed to set aside prosecution on two criminal conspiracy charges against Taro in return for a $206 million penalty and the drugmaker's cooperation in the ongoing probe, federal prosecutors said in a release. As part of the settlement, Taro admitted its role in the conspiracy, saying the scheme boosted sales by more than $500 million, the DOJ said.
Taro has also reached a "framework understanding" with the DOJ's civil division to shell out an additional $213 million to "to resolve all claims related to federal healthcare programs," the drugmaker said.
In a statement, Taro CEO Uday Baldota said the drugmaker was "happy" with the deals and pledged to "fully cooperate" in the government's probe.
Taro is the fifth company to cut a deal with federal prosecutors in an industrywide probe that has fingered some of the biggest players in generics, including Novartis' Sandoz unit and Teva.
In March, Novartis agreed to pay $195 million and enter deferred prosecution to settle federal claims it colluded in the price-fixing scheme between 2013 and 2015.
The criminal settlement came two weeks after a former Sandoz unit exec, Hector Armando Kellum, pleaded guilty to federal conspiracy charges for his role in the scheme to fix prices for a range of the drugmaker's products, including topical steroid clobetasol and antifungal nystatin triamcinolone cream.
Kellum faces 10 years in prison and a $1 million fine, prosecutors said. In exchange for his plea, Kellum agreed to cooperate with the ongoing federal investigation.
As part of its corporate agreement, Novartis admitted "its sales affected by the charged conspiracies exceeded $500 million," the DOJ said, and it agreed to cooperate in the department's ongoing investigation.
Novartis was also in discussions to settle claims with the DOJ's civil division and provisioned an additional $185 million for that effort, the Swiss drugmaker said.
Kellum's deal with the feds came just two weeks after prosecutors charged Ara Aprahamian, a former Taro sales executive. Aprahamian was charged Feb. 4 with three counts of conspiring to fix prices for the company's generic drugs and lying to investigators.
In May, another generics maker, Apotex, agreed to pay $24.1 million to settle claims that it fixed the price of pravastatin, a generic cholesterol medication.
With the feds prowling, states are also pressing the generics industry with their own wide-ranging litigation.
In a June lawsuit, 51 states and territories claimed 26 generics companies and 10 individuals worked together to fix prices on at least 80 dermatological medicines. The defendants include some of the biggest names in the generics business, including Novartis' Sandoz unit, Teva, Mylan and Pfizer.
The states allege company executives used phone conversations, text message, emails, conventions and dinner parties to “fix prices and restrain competition as though it were a standard course of business,” Connecticut’s attorney general William Tong said in a statement.