$170M Settlement Reached Over Price-Fixing Allegations Against Apotex

The U.S. government accused Apotex Inc. of following along on a decade-long scheme to fix the price of generic drugs by its competitors, and on Monday, the company set aside $100 million to offer the U.S. government $170 million in exchange for no charges to be filed.

U.S. prosecutors described the arrangement, one in which prosecutors say it paid off competitors through employee bonuses, as a kickback scheme and charge that The Apotex entered into that kind of arrangement over a decade, “for the sole purpose of benefiting the company.”

The company and its executives committed an “extraordinary criminal act” by targeting manufacturers who sought to lower drug prices, said Assistant Attorney General Kenneth Blanco.

In an order on Monday, Judge William Alsup granted The Apotex a temporary restraining order, preventing the court from enforcing a July 17, deadline for moving forward in the case.

Apotex said in a statement that it has been cooperating with the government’s investigation and has been prepared to pay whatever the U.S. government charges and has volunteered to pay $170 million in order to eliminate any suspicion.

“We have vigorously denied the government’s assertions for many years,” president and CEO Paul Bisaro said in a statement. “While it’s not our intention to seek unnecessary delays, we are unable to continue cooperation with the government’s lawyers given the apparent direction from the court.”

The case was originally filed in federal court in San Francisco in August 2013. Several companies are named in the indictment, including Mylan Laboratories and Teva Pharmaceutical Industries.

Some of the allegations have already become the subject of a multi-billion-dollar antitrust class action lawsuit, brought against the federal government and five other companies by former generic drug competitors, alleging that the Justice Department failed to enforce antitrust laws.

The case is far from over. The Justice Department has spent nearly three years moving to file criminal charges against three executives at Apotex, who allegedly traded company goods for bribes.

In that case, the executives got caught in a separate scheme and ended up cooperating with investigators, giving evidence about the price-fixing scheme.

Their defense attorney, Robert Dantzig, told the judge on Monday that the government will need the help of Apotex executives who may have to testify against former Apotex executives.

“If somebody’s going to jail, it’s going to be them,” Dantzig said.

For their part, prosecutors said that apart from a $3 million payment by one of the executives to settle allegations by one of the rivals, the company has continued to violate the government’s prohibitions on paying bribes by allegedly giving bonuses to employees.

“If this court prevents the United States from taking whatever actions are needed to preserve and enforce this precious right, then other companies who do not wish to be accused of the wrong that they have done and that the company is accused of will still be less than honest,” prosecutors said in court documents.

The gag order from Monday’s case was issued after an hour of arguments between lawyers for Apotex and prosecutors, who sought to justify their bid for an extension of a Monday afternoon deadline to move forward with the case.

The Associated Press contributed to this report.

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