Sandoz Inc., a Swiss generic prescription drug maker, has agreed to a $400 million settlement with 43 states and territories to resolve charges that it engaged in widespread, long-running conspiracies to artificially inflate and manipulate prices, reduce competition, and control the market for many generic prescription drugs.
Sandoz Inc. will pay a total of about $469 million to settle the claims brought by state enforcers, including amounts paid in previous settlements with other states.
The settlement will also resolve allegations that Sandoz Inc.’s past and present international affiliates — Novartis AG, Sandoz AG, and Sandoz Group AG — took part in the alleged anticompetitive conduct and fraudulently transferred assets in order to avoid liability.
As part of the settlement, Sandoz has agreed to internal reforms to ensure fair competition and compliance with antitrust laws.
The states have also reached settlements in the same legal action with Glenmark, Lannett, Bausch, Apotex, and Heritage, totaling about $96.5 million.
“When companies illegally manipulate the market to keep drug prices high, consumers pay the price,” California Attorney General Rob Bonta said in a statement.
A coalition of nearly all states and territories has worked on a series of antitrust cases since 2016.
The first lawsuit included Heritage and 17 other corporate defendants, two individual defendants, and 15 generic drugs. Two former executives from Heritage Pharmaceuticals, Jeffery Glazer and Jason Malek, have since entered into settlement agreements and are cooperating.
The second lawsuit was filed in 2019 against Teva Pharmaceuticals and 20 of the nation’s largest generic drug manufacturers. The lawsuit names 16 individual senior executive defendants.
The third lawsuit, to be tried first, focuses on 80 topical generic drugs that account for billions of dollars of sales in the United States and names 26 corporate defendants and 10 individual defendants.
The fourth lawsuit was filed earlier this year alleging that Novartis AG, Sandoz Group AG, and Sandoz AG are liable for Sandoz’s alleged conduct and for fraudulently transferring assets.
Seven pharmaceutical executives have been cooperating to support the states’ claims in these four cases, Bonta said.
The cases are the result of a series of investigations built on evidence from several cooperating witnesses at the center of the different conspiracies, a huge document database of more than 20 million documents, and a phone records database containing millions of call detail records and contact information for over 600 sales and pricing individuals in the generics industry.
Each lawsuit addresses a different set of drugs and defendants and lays out an interconnected web of competing industry executives that met with each other during industry dinners, “girls’ nights out,” lunches, cocktail parties, golf outings, and communicated via frequent telephone calls, emails, and text messages that were the basis for their illegal agreements.
Throughout the lawsuits, there are reports of defendants using terms such as “fair share,” “playing nice in the sandbox,” and “responsible competitor” to describe how they unlawfully discouraged competition, raised prices, and enforced a culture of collusion.
Among the records obtained by the states is a two-volume notebook containing the notes of one of the states’ cooperators that summarized his discussions during phone calls with competitors and internal company meetings over a period of several years.
The settlement needs to be approved by the states involved.
“The affordability of prescription medications is a crisis in this country, and companies that illegally manipulate drug prices for profit must be held accountable,” Vermont Attorney General Charity Clark said in a statement.
