Sandoz admits antitrust crime, pays $195m in penalties

Novartis’ generics division Sandoz has been fined $195m by the US government for price-fixing and other antitrust actions, the biggest payout in US legal history for this type of criminal activity.

Sandoz was charged with conspiring with four other generic drugmakers to “allocate customers, rig bids, and fix prices for generic drugs” between 2013 and 2015, according to a Department of Justice (DoJ) statement.

The company is paying the fine under a deferred prosecution agreement (DPA), under which it has “admitted that its sales affected by the charged conspiracies exceeded $500m”, and will cooperate with the ongoing criminal investigation.

It is the third pharmaceutical company to admit to criminal charges in the ongoing investigation by the DoJ’s Antitrust Division, after Heritage Pharmaceuticals and Kavod Pharmaceuticals (previously known as Rising Pharma) which also agreed DPAs with the federal department.

DoJ Assistant Attorney General Makan Delrahim said the record fine with one of the largest manufacturers of generic drugs “is a significant step toward ensuring that prices for generic drugs are set by competition, not collusion”.

“Sandoz conspired for years with other manufacturers and their executives to raise prices for critical medication, and the Antitrust Division will continue its ongoing investigation to hold both individuals and corporations accountable,” he added.

One count among the four charges was that Sandoz compared with Kavod to allocate customers and fix prices of benazepril HCTZ, a combination ACE inhibitor and thiazide diuretic used to treat cardiovascular disease.

Three other counts involved unnamed generic drugmakers in New York, Michigan and Pennsylvania, and focused on antitrust activity related to a range of products including topical formulations of clobetasol, denoside and nystatin/triamcinolone and tobramycin inhalation solution.

The DoJ notes that four charges against company executives have been filed in the investigation.  Three have pleaded guilty, including former Sandoz executive Hector Armando Kellum.  Ara Aprahamian, a former executive of a company based in New York, was indicted in February 2020 and is awaiting trial.

The DPA is another embarrassing incident for Novartis, after a series of scandals in the last few years, including the $1.2m payout to President Donald Trump’s ex-lawyer Michael Cohen, data manipulation involving its gene therapy Zolgensma and bribery and mis-marketing allegations in several countries including the US.

Last year, Novartis said it was implementing a “corporate integrity” agreement that will include a new compliance structure – headed by a senior executive – with monitoring by an independent third-party organisation.