Justice Department Files First Charges in Generic Drug Price-Fixing Probe

Former pharma execs said to seek plea bargain

The U.S. Department of Justice (DOJ) has charged two former senior generic pharmaceutical executives for their roles in conspiracies to fix prices, rig bids, and allocate customers for certain generic drugs—the first criminal charges stemming from a two-year investigation. The men are reportedly in talks with the government about a plea agreement.

According to the charges, Jeffrey Glazer, the former CEO of Heritage Pharmaceuticals, a generic drugs company based in Eatontown, New Jersey, and Jason Malek, the former president of the same company, conspired to fix prices, rig bids, and allocate customers for the antibiotic drug doxycycline hyclate. In addition, Glazer and Malek allegedly conspired to fix prices and allocate customers for the diabetes medication glyburide. According to the DOJ, the doxycycline hyclate conspiracy took place from as early as April 2013 until at least December 2015; the glyburide conspiracy took place from as early as April 2014 until at least December 2015.

The charges were filed in the U.S. District Court for the Eastern District of Pennsylvania in Philadelphia.

“Millions of Americans rely on prescription medications to treat acute and chronic health conditions. By entering into unlawful agreements to fix prices and allocate customers, these two executives sought to enrich themselves at the expense of sick and vulnerable individuals who rely upon access to generic pharmaceuticals as a more affordable alternative to brand-name medicines,” said Deputy Assistant Attorney General Brent Snyder of the DOJ’s Antitrust Division. “These charges are an important step in correcting that injustice and in ensuring that generic pharmaceutical companies compete vigorously to provide these essential products at a price set by the market, not by collusion.”

“Conspiring to fix prices on widely used generic medications skews the market, flouts common decency—and very clearly breaks the law,” said Special Agent in Charge Michael Harpster of the FBI’s Philadelphia Division. “It’s a sad state of affairs when these pharmaceutical executives are determined to further pad their profits on the backs of people whose health depends on the company’s drugs.”

Sources: DOJ; December 14, 2016; and Reuters; December 14, 2016.