Apotex to pay $100 million to settle allegations of drug price-fixing

Linda Sinclair Sherman, the widow of billionaire Barry Sherman, is the target of a criminal investigation by the U.S. Justice Department.

The family and friends of Barry Sherman, founder of pharmaceutical company Apotex Inc., have agreed to pay a total of more than $100 million to resolve allegations that the company conspired with at least a dozen companies to fix prices of about 20 prescription medications, according to an agreement between the company and U.S. attorneys in Manhattan and the U.S. Postal Service’s Office of Inspector General.

The investigation began in January 2010 when the federal government began monitoring negotiations between representatives of several companies over prices for one anti-viral drugs, antiviral drugs such as oseltamivir and zanamivir, anti-infectives like ampicillin and cephalosporins, liquid antibiotics, non-steroidal anti-inflammatory drugs, oral contraceptives, hormone replacement therapies, the generic versions of Remicade and Enbrel, according to prosecutors.

While that investigation continues, the Justice Department has also launched a criminal investigation into claims that John D. Geraci, a unit president and associate of Apotex’s regional general counsel, conducted close ties with the Indian pharmaceutical industry to obtain confidential pricing information.

“The government case, which we anticipate will be fully prosecuted, will hold Apotex, Geraci, the Sherman family and key associates in the U.S. and abroad accountable for their conduct in facilitating price-fixing,” U.S. Attorney Geoffrey Berman said in a statement.

But the government’s case was hobbled by the death of Irving A. Geraci Jr., a former federal prosecutor, who was killed in a 2012 car crash. His death followed a conflict of interest inquiry into allegations that he had in the past shared information with Sherman’s companies and the government to obtain proprietary details about the administration of a drug for deadly syphilis.

The preliminary investigation into Barry Sherman and Geraci began after a whistleblower came forward in 2009 with a business-focused indictment against Apotex and the person who brought it to the company’s attention was reticent to testify, according to the company. The Justice Department’s investigation has taken “upwards of five years” and no criminal charges were ever filed because some facts could not be backed up, according to Barry Sherman’s attorney, Mark S. Keyser.

But now he is opening a dialogue with the U.S. Department of Justice and the government has told him it will attempt to bring a criminal case against him.

“We believe the testimony will bear out that there was no violation of the law,” Keyser said. “It is our opinion and our hope that the process will prove our position and give the facts a proper forum to be reviewed.”

Keyser would not comment on the criminal investigation other than to say that Apotex has paid more than $100 million in the civil litigation, which is continuing. When questioned, Keyser refused to name any of the medical device or pharmaceutical companies the Sherman family agreed to settle with. “We have neither verified nor denied the allegations,” he said.

The family received a $74 million settlement from some medical devices manufacturers in 2014 and has received settlements from other industry members, according to court documents.

Publicly, Barry Sherman remained upbeat about the company despite the mounting allegations and acknowledged that key people in the organization were now having to operate under a cloud of uncertainty and unfounded allegations.

“Apotex continues to focus on protecting the health of patients and continuing to foster patient-centric care in the face of allegations that are against the principles of corporate governance and conduct,” said Ray Munroe, senior vice president of human resources at Apotex. “We have great people, a deep bench of employees and a strong culture at Apotex and we will continue to move forward.”

The next court hearing for Sherman is set for Dec. 19.

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