Sun Pharma’s U.S. Arm Agrees To Settle Multi-Million Dollar Drug Price-Fixing Charges
The company agrees to fully cooperate its ongoing investigation.
Sun Pharmaceutical Industries Ltd.’s U.S. subsidiary has agreed to pay more than $400 million to settle charges that it conspired to fix prices of generic drugs, in a long-running investigation by the Department of Justice, antitrust division and civil division of U.S.
The antitrust division, according to a statement on the website of Department of Justice, announced a deferred prosecution agreement resolving the charges against Taro Pharmaceutical Industries U.S.A., under which the company agreed to pay a criminal penalty of $205 million and admitted that its sales affected by the charged conspiracies were in excess of $500 million.
Under the deferred prosecution agreement, the justice department will file information for conduct that took place between 2013 and 2015, the Indian parent of Taro said in an exchange filing. If Taro adheres to the terms of the agreement, including the payment of $205.7 million, the justice department will dismiss the information at the end of a three-year period, it said.
Additionally, Taro agreed to pay $213.3 million to resolve all claims related to federal healthcare programme, the filing said.
Taro is discussing a separate corporate integrity agreement with the Department of Health and Human Services, Office of Inspector General, which will supplement its existing compliance programmes based upon established best practices and industry standards, as well as the company’s global code of conduct, the filing said.
Uday Baldota, chief executive officer at Taro, in the filing said the company will continue to fully cooperate with the government on its ongoing investigation into the generic pharmaceutical industry.
The settlement comes more than five years after the prosecutors started investigating allegations that generic drugmakers conspired to prop up the prices of certain widely used medications.
Taro U.S. had admitted to participating in two charged conspiracies between 2013 and 2015, the U.S. justice department said in the statement. First, Taro U.S. was charged for its role in a conspiracy with Sandoz Inc. and a former marketing executive at Taro. And second, for its role in a conspiracy with a generic drug company based in Pennsylvania and other individuals.
Taro U.S. and its co-conspirators, according to the justice department, agreed to fix prices, allocate customers, and rig bids for numerous generic drugs, including medications used to prevent and control seizures and treat bipolar disorder, pain and arthritis, and various skin conditions.
Novartis AG’s Sandoz was the first large generic drugmaker to reach a settlement with the U.S. Department of Justice in a price-fixing case in March this year.
According to Dolat Capital, the latest development removes an overhang on the Sun Pharma’s stock, and the settlement was in line with its expectation of $500 million.
While Nirmal Bang Securities agreed that Taro’s settlement amount of $419 million is close to Sandoz’s $385 million, Vishal Manchanda, research analyst at the brokerage, told BloombergQuint that there is lack of clarity on how these will shape up in terms of incremental liabilities for Taro or Sun Pharma as there are additional litigations ongoing with state attorney generals.
Anshuman Gupta, analyst at Investec, too, said the settlement with the U.S. justice department removes a big overhang but other ongoing litigations are likely to attract higher penalties.
Shares of Sun Pharma gained as much as 4.6% in early trade on Friday, compared with the Nifty 50 Index's 0.59% drop.