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Generic drug company executives facing criminal charges

In previous posts, we’ve examined a number of different white collar crimes, such as financial fraud. Today’s post focuses on another type of white collar crime: antitrust violations.

An antitrust offense generally refers to a behavior that violates one of several federal antitrust laws, such as the Sherman Act or the Clayton Act. The offense also might also be punishable under state-specific antitrust laws.

In a recent example, several generic drug industry executives are facing charges of price fixing. The behavior drew the attention of federal authorities because of unusually high price increases: a 500% price hike of EpiPen, used to deliver epinephrine for severe allergic reactions; and a 5,400% price increase of Daraprim, used in the treatment of deadly parasite infections.

The allegations of price fixing culminated in a federal court lawsuit against two former executives at Heritage Pharmaceuticals Inc.. The executives are facing charges under the Racketeer Influenced and Corrupt Organizations Act (RICO). In a related but separate lawsuit, 20 states have filed antitrust claims against six companies, including Heritage, related to the price fixing of generic drugs.

In a price-fixing investigation, officials may start by examining communications between high-ranking company officials. The communications often occur close in time to measurable changes in the company’s performance, such as price convergence. In practical terms, that generally translates into a subpoena of a company’s emails and other electronic data, often terabytes in size. After reviewing that electronic evidence, officials may conduct interviews of company officials.

Needless to say, a company’s sensitive and proprietary information needs to be protected against overly broad discovery sweeps. A law firm that focuses on white collar defense can help protect a company’s rights.

Source: MedCity News, “How states are using the law to bring drug executives to heel,” Johanna Mayer, Feb. 16, 2017

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