U.S. prosecutors, backed by three drug companies they accuse of price-fixing, have secured the cooperation of another drug company, Canada’s Apotex Inc., under a deal that includes a $100 million fine and a $38 million donation to a charity for cancer care.
The company said on Wednesday that it had agreed to the terms of a civil penalty deal with the U.S. Justice Department as part of an investigation into whether it and rivals conspired to fix prices on generic drugs, according to court documents.
The pharma giant Pfizer reached a similar deal with the U.S. authorities earlier this year, agreeing to pay $414 million to settle a similar antitrust claim.
According to documents seen by the Washington Post, the prosecutors are investigating whether Apotex paid a $13 million bribe to its chief competitor, Dr. Reddy’s Laboratories Ltd., in 2012 in an effort to halt its push into a new generic-drug market. They are also investigating Dr. Reddy’s alleged misuse of funds raised by participating in a rebate program. Apotex has denied both the bribery charges and the allegations concerning Dr. Reddy’s
Under the terms of a civil settlement, the Justice Department will ask the court to rule that Apotex’s bid to enter the Indian generic market constituted an infringement of trade secrets, officials told a federal court in New York on Wednesday. The case will likely be handled through arbitration rather than a trial.
Signed as a consent judgment by U.S. Magistrate Judge Peter Lichtman, the deal is subject to U.S. District Judge Leonard Sand’s approval. A hearing on the Justice Department’s request for consent to the settlement is set for Wednesday.
“Owing to the nonpublic material nature of the investigation, Apotex cannot comment on details at this time,” the company said in a statement.
The settlement falls short of a criminal indictment. Last month, J.P. Morgan bank issued a note that Apotex needed a settlement or faces insolvency.
“Apotex still faces charges that it paid bribes to win U.S. business from executives at Dr. Reddy’s,” the bank wrote. “Its difficulties have grown larger as it has earned less through 2014 than it had through 2012.”
Apotex Chief Executive Officer Jerome Lambert, who also serves as one of India’s most senior members of parliament, resigned last month. The firm says its turnover is $2.8 billion.
Pharmaceutical giant Abbott Laboratories reached a $1.6 billion settlement with the U.S. authorities earlier this year to settle allegations that it had offered kickbacks to induce contract-renewal for its Tricor acne treatment, the second-largest such settlement in American history. Abbott paid a $519 million fine, while it also agreed to pay $85 million in civil penalties to cover costs.
As part of the settlement, Abbott also issued a public donation to the Washington facility of the National Institutes of Health’s Hutchinson Cancer Research Center that will go toward clinical trials of potential new cancer treatments.
More than 500 consumers and 31 companies were sued as part of the joint investigation of the Tricor case, according to the court documents. Four of the companies reached resolutions, without paying any fines. Two more companies have reached settlements that are pending in court.
Mark Goodman, co-founder of R.J. Reynolds Tobacco, the maker of Camel cigarettes, also pleaded guilty to conspiring to fix prices and commit wire fraud in a 1998 price-fixing case. He was sentenced to eight years in prison.
Six months ago, Dallas-based drugmaker Abbott took a $1.6 billion charge to close one of its Swiss factories as it weakens operations in one of its most important units amid growing competition from generic drugs.
Last week, Pfizer agreed to a $5.2 billion deal to sell its infant nutrition and baby formula units to Nestle SA. It is merging the units with the recently acquired baby food business from Danone SA for a total cash consideration of $11.85 billion.
This report includes information from the Associated Press