Company Also Enters into Deferred Prosecution Agreement for Role in Price-Fixing Scheme
PHILADELPHIA, PA – United States Attorney William M. McSwain today announced that generic drug manufacturer Heritage Pharmaceuticals, Inc. will pay over $7 million in a civil settlement to resolve allegations of a scheme to fix prices and allocate customers for several of its drugs. The civil resolution of these allegations in the Eastern District is a component of the company’s larger resolution with the Department of Justice’s (DOJ) Antitrust Division and Civil Division.
This over $7 million civil healthcare fraud settlement resolves False Claims Act allegations that Heritage paid and received remuneration from other drug manufacturers between 2012 and 2015, and engaged in a scheme to artificially inflate and fix prices on certain generic drugs. These drugs were supplied to Medicare, Medicaid, and the Department of Defense’s TRICARE program beneficiaries, as well as the Department of Veterans Affairs. The drugs allegedly implicated in this scheme address a wide variety of health conditions, and include hydralazine, used to treat high blood pressure, theophylline, used to treat asthma and other respiratory problems, and glyburide, used to treat diabetes.
Separately, Heritage has entered into a three-year deferred prosecution agreement with the DOJ Antitrust Division with regard to a criminal charge that the company conspired to suppress and eliminate competition by allocating customers, rigging bids, and fixing and maintaining prices in violation of the Sherman Act. The deferred prosecution agreement was also filed in the Eastern District of Pennsylvania. Under the terms of the deferred prosecution agreement, Heritage will pay a $250,000 monetary penalty and will avoid prosecution if it complies with the terms and conditions of the agreement.
“My Office is proud to announce this important civil healthcare fraud settlement with the Civil Division, and the deferred prosecution agreement with the Antitrust Division,” said U.S. Attorney McSwain. “Price-fixing and market allocation in generic drugs will not be tolerated, especially when such actions artificially inflate prices and negatively impact federal healthcare programs like Medicare and Medicaid. This resolution with Heritage is an important milestone, and my Office will continue to investigate and pursue illegal conduct regarding generic drugs.”
“Consumers have the right to generic drugs sold at prices set by competition, not collusion,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division. “Heritage and its co-conspirators cheated and exploited American patients to pad their bottom line. Today’s resolution—requiring an admission of guilt, a criminal penalty, and cooperation in the ongoing investigation—sends a clear message to generic pharmaceutical companies and their executives that this conduct will not be tolerated. The Division and its law enforcement partners, including the Federal Bureau of Investigation and United States Postal Service-Office of the Inspector General, will continue to hold companies and individuals accountable for collusion that undermines the integrity of the market for drugs that should be a less expensive alternative to brand name pharmaceuticals.”
“Plotting to raise prices on generic medications is illegal and may result in patients’ inability to afford vital medicines,” said Maureen R. Dixon, Special Agent in Charge of the Philadelphia Regional Office of the Inspector General, Department of Health and Human Services (HHS-OIG). “Along with our law enforcement partners at the Department of Justice, the Federal Bureau of Investigation, and United States Postal Service-Office of the Inspector General, we will continue to investigate allegations of companies engaging in actions that put the public and the Medicare program at risk.”
The civil settlement was handled by the United States Attorney’s Office for the Eastern District of Pennsylvania and the Civil Division’s Commercial Litigation Branch, with support from HHS-OIG, Defense Health Agency Program Integrity, and the Office of Inspector General for the Department of Veterans Affairs. The investigation and settlement for the U.S. Attorney’s Office for the Eastern District of Pennsylvania were handled by Assistant U.S. Attorneys Landon Jones and Anthony Scicchitano.
The civil claims resolved by the settlement are allegations against Heritage only, and there has been no determination of liability.