Ex-Sandoz exec admits role in generic drug price-fixing plot

Former Sandoz executive Hector Armando Kellum has pled guilty to charges levied against him, which allege he participated in a price-fixing scheme of generic drugs in the US. 

Court documents revealed that since at least March 2013, Kellum conspired to fix prices, rig bids and allocate customers for generic drugs. At the time, Kellum was a senior executive at Sandoz, the generic medicines division of Swiss pharma company Novartis.

The two named products are clobetasol, an eczema and psoriasis treatment, and nystatin triamcinolone, an anti-fungal drug that also has a corticosteroid.

Although these two medicines were the only ones specifically identified, the US Department of Justice (DoJ) said the conspiracy was not limited to these products, implying others could have been affected by the scheme.

The DoJ also named one of Kellum’s alleged co-conspirators as Ara Aprahamian, a former sales and marketing executive at Taro Pharmaceutical Industries, who was indicted on 3 February in Philadelphia on similar anti-trust charges.

According to a statement from the DoJ, Kellum is the fourth executive to be charged in the ongoing investigation, and also the third to plead guilty to the charges. So far, two companies have also been charged for their roles in the price-fixing scheme.

“Kellum’s plea shows he lost sight of the basic principle that medicine is intended to heal sick people, not line an individual's pockets by colluding to rig bids and manipulate drug prices," said Timothy R. Slater, assistant director in charge of the FBI Washington Field Office.

"The FBI and our partners will continue to fight for the American public to have access to a competitive marketplace for pharmaceuticals. We will not stand by while large corporations and business executives in power try to skirt the rules at the expense of unsuspecting citizens,” he added.

Drug pricing is a particularly hot-topic among US politicians at the moment, and has snowballed into an urgent bipartisan issue in the country. President Donald Trump, as well as Democratic presidential hopeful Bernie Sanders, have both criticised surging drug prices – with much of the blamed aimed at the pharma industry.

This announcement is just the latest development as anti-trust investigations into price-fixing in the US pharma industry continue to unfold.

A number of major generic drugmakers have also been accused of antitrust practices, including Teva Pharmaceuticals, Sandoz, Mylan and Pfizer – all were named in a wide-ranging lawsuit filed in May last year by 44 states in the US.

The criminal antitrust probe initiated by the DoJ claims that the accused drug makers colluded to maintain high prices of widely-prescribed drugs for more than five years, which it alleges cost federal health programmes billions of dollars.