Barry Sherman’s pharmaceutical company Apotex has settled allegations that it fixed the prices of drugs, paying almost $100 million to federal authorities, the company disclosed in a stockholder annual report filed Monday with the U.S. Securities and Exchange Commission.
Apotex disclosed in the filing that it has resolved a 2014 U.S. Department of Justice antitrust investigation of the pharmaceutical industry but did not provide further details.
The company was never charged in connection with the investigation.
Apotex said it will write off $78.8 million of the $100 million settlement, calling it a “non-cash charge.”
Apotex is one of Canada’s largest pharmaceutical companies. Its other products include nasal spray, eye drops and prescription and over-the-counter drugs.
The Attorney General’s Office in New York reported last year that authorities in 12 states were investigating whether Apotex and others established cartels to artificially maintain prices. The Attorney General said the investigation was prompted by complaints from whistleblowers in 2011 and 2012 who said Apotex and its competitors had formed “manufacturing cartels, coordinated prices and imposed illegal price controls.”
The Attorney General’s Office said then that one complaint involved a price freeze for generic asthma medication Teva Inc.’s Airborne. The group claimed that the price freeze worked to the disadvantage of pharmaceutical buyers in parts of the country that made Airborne more expensive than it otherwise would have been.
Apotex did not respond to a request for comment Tuesday.
Apotex said that despite the settlement, the company remains committed to ethical business practices.
“Apotex values its employees, suppliers and customers,” the company said in its annual report. “As the company’s third-largest shareholder, Apotex regrets any personal pain that its employees may have caused. Apotex is prepared to protect itself from malpractice and liability and compensate its employees and suppliers for any injury or harm as a result of misconduct or fault attributable to other parties.”
The settlement with the Justice Department did not cover claims from the U.S. Federal Trade Commission, which has previously sued Apotex in the U.S. District Court for the Southern District of Florida, accusing the company of illegally delaying the release of generic drugs. Apotex has denied the allegations.
Apotex is an expert in the generic drug business. The company said it supplies six out of every 10 generics sold in Canada and its net sales, which it manages by “overseeing its own clinical, regulatory and manufacturing expertise,” more than doubled to more than $3 billion during 2017.
Apotex added that “considerable” changes have taken place in the pharmaceutical industry since the discovery of large price-fixing cartels in the early 2000s, and that those changes “remain to be seen.”
In the U.S., Sherman made his fortune in real estate and the stock market but quickly made the switch to pharmaceuticals in 1979 and after being able to turn the Apotex start-up into a powerhouse, created the Toronto Stock Exchange’s first biotech index.
Sherman, who died in June, died at the age of 75, just over three years after his company said he would step down at the end of December 2018 as executive chairman, the company said.
The U.S. Anti-Trust Division said it will cease its probe of Apotex next month.
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