Vermont AG: Sandoz Reaches $469 Million Price-Fixing Settlement

• Vermont's Attorney General joined 42 other states and territories to approve a $469 million multistate settlement with Sandoz Inc. and Fougera Pharmaceuticals Inc.
• The settlement resolves allegations of a widespread, long-running conspiracy to inflate generic drug prices and reduce competition.
• Vermont will receive $358,000 from Sandoz as part of the agreement.
• Allegations of fraudulent asset transfers against Sandoz's international affiliates, including Novartis AG, were also resolved.
• Sandoz has agreed to internal reforms and injunctive terms to ensure future antitrust compliance.

The allegations of fraudulent asset transfers against Sandoz’s international affiliates, including Novartis AG, Sandoz AG, and Sandoz Group AG, introduce a significant dimension to corporate liability.

Vermont Attorney General Charity Clark has joined a coalition of 42 other states and territories in seeking court approval for a significant $469 million multistate settlement. This agreement, reached with Sandoz Inc. and Fougera Pharmaceuticals Inc., aims to resolve extensive allegations that these generic drug manufacturers engaged in a prolonged and widespread conspiracy. The alleged scheme involved artificially inflating and manipulating prices for numerous generic prescription drugs, thereby reducing competition and unreasonably restraining trade.

Under the terms of this Sandoz antitrust settlement, Vermont is slated to receive $358,000. The total $469 million payout from Sandoz encompasses this agreement along with previous settlements the company reached with other states, addressing claims brought by state enforcers. A settlement in principle was initially announced by the states on August 3, preceding this formal request for court approval.

Crucially, the settlement also addresses allegations against Sandoz Inc.'s past and present international affiliates, including Novartis AG, Sandoz AG, and Sandoz Group AG. These entities were accused of participating in the alleged anticompetitive conduct and, furthermore, of fraudulently transferring assets to evade potential liability. As part of the resolution, Sandoz has committed to implementing meaningful injunctive terms, which include a series of internal reforms designed to ensure fair competition and robust generic drug antitrust compliance moving forward.

This Vermont AG Sandoz price-fixing settlement is a component of a much larger, ongoing legal effort initiated by a coalition of nearly all U.S. states and territories, which began its series of antitrust cases in 2016. The initial complaint in this extensive litigation targeted Heritage Pharmaceuticals, 17 other corporate defendants, two individual defendants, and implicated 15 different generic drugs. Following this, two former executives from Heritage Pharmaceuticals, Jeffery Glazer and Jason Malek, entered into settlement agreements and are now cooperating with authorities.

The broader generic drug price manipulation lawsuit has seen the filing of several subsequent complaints. A second complaint, filed in 2019, named Teva Pharmaceuticals and 21 of the nation’s largest generic drug manufacturers, alongside 16 individual senior executive defendants. The third complaint, which is currently slated for the first trial in February 2027 in Hartford, Connecticut, focuses on 80 topical generic drugs that collectively account for billions of dollars in U.S. sales, listing 26 corporate defendants and 10 individual defendants.

Earlier this year, a fourth complaint was filed, specifically alleging that Novartis AG, Sandoz Group AG, and Sandoz AG bear liability for Sandoz’s alleged conduct and for engaging in fraudulent asset transfers. This latest Sandoz settlement follows previous resolutions with other pharmaceutical companies, including Glenmark, Lannett, Bausch, Apotex, and Heritage, along with Heritage’s parent company, Emcure, which collectively amounted to $96.5 million.

The resolution of the Sandoz antitrust settlement underscores the persistent scrutiny on generic drug manufacturers regarding price manipulation and anticompetitive practices. The agreement's requirement for Sandoz to implement internal reforms and adhere to injunctive terms highlights the increasing emphasis on robust antitrust compliance within the pharmaceutical sector. This development serves as a critical reminder for pharmaceutical companies, particularly those involved in generic drug manufacturing, to meticulously review and strengthen their antitrust compliance programs.

Furthermore, the allegations of fraudulent asset transfers against Sandoz’s international affiliates, including Novartis AG, Sandoz AG, and Sandoz Group AG, introduce a significant dimension to corporate liability. This aspect of the case, which was addressed in a separate complaint earlier this year, suggests that parent companies and their corporate structures could face heightened risks and scrutiny in similar antitrust litigation, especially concerning efforts to shield assets from potential judgments. The inclusion of Fougera Pharmaceuticals antitrust allegations within this settlement also broadens the scope of companies under review.

As the states prepare for the first trial in February 2027, the ongoing nature of these investigations signals a continued focus on ensuring fair competition in the generic drug market. Consumers who purchased generic prescription drugs between May 2009 and December 2019 may be eligible for compensation, with resources available for claim submission, further emphasizing the broad impact of these alleged price-fixing schemes.

Lawyers advising pharmaceutical companies, especially generic drug manufacturers, should review their clients' antitrust compliance programs in light of this significant multistate settlement and the ongoing scrutiny of price-fixing in the industry. The allegations of fraudulent asset transfers against parent companies also highlight potential risks for corporate structures in such litigation.

Source: Original reporting via Vermont Attorney General's Office