Washington, DC - A federal grand jury in the U.S. District Court for the Eastern District of Pennsylvania returned an indictment against a former senior executive for his role in conspiracies to fix prices, rig bids, and allocate customers for generic drugs, and for making a false statement to federal agents who were investigating those conspiracies, the Department of Justice announced Tuesday.
The three-count indictment, filed in Philadelphia, charges Ara Aprahamian, a former top executive at a generic pharmaceutical company, with participating in two conspiracies to fix prices, rig bids, and allocate customers for generic drugs. Aprahamian is charged with participating in the conspiracies when he was the Vice President of Marketing, and then the Vice President of Sales and Marketing at a corporation headquartered in New York engaged in the marketing and sale of generic drugs in the United States.
Count One charges Aprahamian for his role in a conspiracy with a generic drug company based in New Jersey and other individuals, from at least as early as March 2013 and continuing until at least June 2015. Count Two charges Aprahamian for his role in a conspiracy with a generic drug company based in Pennsylvania and other individuals, from at least as early as May 2013 and continuing until at least December 2015. According to the indictment, the defendant and his co-conspirators agreed to increase prices and allocate customers for numerous drugs, including, but not limited to, medications used to treat and manage arthritis, seizures, pain, various skin conditions, and blood clots.
In addition, Count Three of the indictment charges Aprahamian with making a false statement to an FBI agent when the FBI executed a search warrant at Aprahamian’s employer’s headquarters in September 2016. According to the indictment, Aprahamian falsely stated to the FBI that he never had a conversation with a competitor about the pricing of a product before that product was launched.
“Today’s charges demonstrate the Antitrust Division’s resolve in rooting out collusion that corrupted the marketplace for generic drugs and led to higher prices for critical medications used by millions of Americans,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division. “Along with our law enforcement partners, the Division will ensure that executives who cheat consumers are not immune from our antitrust laws, and that those who seek to impede or obstruct our investigations are prosecuted to the full extent of the law.”
“The U.S. Postal Service Office of Inspector General is committed to ensuring that any activity related to price-fixing, bid-rigging and/or market allocation in the generic drugs industry is identified and aggressively investigated,” said Special Agent in Charge Scott Pierce, U.S. Postal Service Office of Inspector General. “The U.S. Postal Service spends hundreds of millions of dollars every year on health care costs, including expenses related to prescription drugs. This indictment is a testament to the dedication and determination of the legal and investigative teams and sends a clear message to anyone who would participate in this sort of activity. Along with our colleagues at the Department of Justice Antitrust Division and the Federal Bureau of Investigation, the U.S. Postal Service Office of Inspector General stands ready to support these critical inquiries going forward.”
“Americans suffering from chronic health problems and pain conditions should not have to be concerned about collusion by pharmaceutical executives that could increase the price of their essential medications,” said Timothy R. Slater, Assistant Director in Charge of the FBI’s Washington Field Office. “The FBI is dedicated to investigating and bringing those responsible for these crimes to justice, on behalf of the American public.”
“My Office is proud to announce yet another enforcement action in this ongoing criminal investigation with the Antitrust Division,” said U.S. Attorney William M. McSwain for the Eastern District of Pennsylvania. “This is the third pharmaceutical price fixing case announced in our District in just the last year, following cases against Rising Pharmaceuticals in December 2019, and Heritage Pharmaceuticals in May 2019. Along with our partners at the Antitrust Division, we remain heavily focused on illegal price fixing and market allocation in generic drugs and on addressing the impact those practices have on federal healthcare programs like Medicare and Medicaid. These criminal charges against a former top corporate executive are yet another important step in that fight.”
Aprahamian is the third executive charged for his participation in conspiracies to fix prices, rig bids, and allocate customers for generic drugs. The two individuals previously charged entered guilty pleas in January 2017. To date, two companies have also been charged. Both corporate charges were resolved by deferred prosecution agreement.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
The offense charged in Counts One and Two carries a statutory maximum penalty of 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by victims if either amount is greater than $1 million. The offense charged in Count Three is punishable by imprisonment for not more than five years, and a fine of not more than $250,000.
This case is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the generic pharmaceutical industry, which is being conducted by the Antitrust Division with the assistance of the United States Postal Service Office of Inspector General, the FBI’s Washington Field Office, the FBI’s Philadelphia Field Office, and the U.S. Attorney’s Office for the Eastern District of Pennsylvania.