Price-Fixing & Bid Rigging

May 30, 2024  Generic Durg Price Fixing

After admitting to the crime four years ago, a former Sandoz executive will avoid hard time for his part in a generic drug price-fixing scheme. 

Hecter Armando Kellum, a former senior executive at Sandoz, pleaded guilty back in 2020 to the charge of conspiracy to restrain trade. The federal charge stemmed from his participation in an anticompetitive price-fixing web for generic drugs from 2013 to 2015.

The charge held a maximum sentence of 10 years in prison and a fine of up to $1 million, according to the 2020 plea agreement (PDF). In exchange for his guilty plea, Kellum agreed to cooperate with the federal investigation into the generics pricing conspiracy.

May 13, 2024 Bid Rigging High School Sports Equipment

A former sales employee of a manufacturer and distributor of football helmets and other sports equipment pleaded guilty today for his role in three separate conspiracies — two conspiracies to rig bids in violation of the Sherman Act and one conspiracy to commit wire fraud — all related to sports equipment for schools located in Mississippi and elsewhere. At least 100 schools throughout Mississippi and elsewhere were victims of these conspiracies.
According to court documents, Charles Ferrell Trimm conspired with two unnamed sports equipment distributors and numerous individuals to rig bids from August 2020 through November 2022 and from May 2021 to February 2023, respectively. Trimm and his co-conspirators agreed to submit complementary bids to schools located in Mississippi and elsewhere in order to obtain procurements for school sports equipment and related services. Trimm also conspired with unnamed co-conspirators to commit wire fraud by submitting false bids to schools located in Mississippi and elsewhere from May 2016 to July 2023. As a part of this scheme, Trimm and others used an unidentified individual’s identity without authorization, including by forging the individual’s signature.
“The charged criminal schemes harmed public schools by subverting their procurement processes and providing the false appearance of competition for precious taxpayer dollars,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “The Antitrust Division and its partners will continue to protect taxpayers and students across the country by stopping bid rigging and fraud that targets government procurements wherever we find it, including at the state and local levels.”
https://www.justice.gov/opa/pr/sports-equipment-sales-professional-pleads-guilty-long-running-bid-rigging-schemes-and

May 8, 2024 Hormel Pork Price Fixing
A federal judge has granted preliminary settlements totaling $7.4 million in a series of class action lawsuits accusing Hormel Foods Corp. of price-fixing by participating in a conspiracy to manipulate pork product prices, as reported by Bloomberg.
Judge John Tunheim of the US District Court for the District of Minnesota approved the settlements between Hormel and two plaintiff classes that include both direct purchasers of pork products and commercial and institutional indirect purchasers. These settlements mark a milestone for a legal saga that began in 2018, with accusations that major pork producers had colluded to restrict pork supplies, thus inflating consumer prices in violation of antitrust laws.
The lawsuits allege that dominant players in the pork industry, controlling a significant portion of the nation’s pork supply, conspired for years to manipulate prices. Central to these allegations is the purported use of data from Indiana-based Agri Stats, a company which the Department of Justice sued last fall over similar antitrust concerns.
Despite the latest developments, the accused pork companies have strongly denied the allegations. However, several industry giants, including JBS, Tyson and Smithfield, have opted to settle, collectively paying out over $200 million to resolve the lawsuits against them, as detailed in Bloomberg’s report.

https://www.pymnts.com/cpi-posts/federal-judge-grants-7-4-million-settlement-in-pork-price-fixing-case/

March 1, 2024 Price Fixing Construction Projects

Four men worked together to squeeze extra money out of Oklahoma Department of Transportation construction projects. The final co-conspirator pleaded guilty in federal court in late February.

Taxpayer-funded construction projects use a bid system, where companies compete to offer the most cost-effective services. That includes erosion control projects, which help stabilize the land around roads. But the owners and operators of four Oklahoma erosion control companies agreed not to compete with each other, conspiring to falsely inflate the price of projects.

In some cases, companies would intentionally submit high bids or refuse to submit bids at all, effectively guaranteeing another company’s bid would be accepted. The companies took turns based on the location of the construction project, fixing prices for more than $100 million worth of contracts.

Investigators from the U.S. Department of Transportation’s internal watchdog office and the Federal Bureau of Investigations worked on the case. Four separate cases were filed in the U.S. District Court in Oklahoma City, charging each co-conspirator with violating the Sherman Antitrust Act.

“In Oklahoma and across the United States, Americans depend on transportation infrastructure as they travel to work, study, shop and visit family,” Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division said in a statement. “Protecting fair and open competition for the public contracts that fund this infrastructure has never been more vital.”

The defendants owned and/or operated erosion control companies across the state:

• James Travis Feazel, the former operations manager of a company based in Weatherford. Feazel was involved in the conspiracy between 2017 and 2023, during which time his company participated in $50 million of bids. Before operating the erosion control company, Feazel worked for the Oklahoma Department of Transportation for 15 years, according to his LinkedIn.

• Stanley Mark Smith, the owner of a company operated out of Claremore and Catoosa. Smith and Feazel were both involved for the full known length of the conspiracy, from 2017 to 2023, during which Smith’s company participated in $42 million of bids.

• Roy Henry Heinrich, the former owner of an El Reno-based company. He stayed involved in the conspiracy from 2017 until at least 2021. His company targeted $7 million worth of bids during that time.

• Ryan Ashley Sullivan, the owner of a company in Lawton. He was involved in the conspiracy from 2017 until at least 2019. The U.S. Department of Justice didn’t provide information about the worth of his company’s bids.

Feazel was the first to plead guilty in September 2023; Smith was the last in February 2024.

The charges carry a maximum of 10 years in prison and up to a $1 million base fine for each co-conspirator. The court could add fines based on how much money the conspirators gained from their crimes.

https://www.kosu.org/local-news/2024-03-01/4-oklahomans-convicted-in-100-million-construction-bid-rigging-conspiracy

Feb 24, 2024 Chatham County Housing Director Sentenced for Bid-Rigging/No-Work

The former director of the Chatham County Housing Authority has been sentenced to 2 1/2 years in prison and ordered to pay $194,136 in restitution for her part in a “bid-rigging, no-work” conspiracy that paid friends and relatives more than $200,000 for work they often never performed.

Joanna Johnson Davis, 65, of Durham pleaded guilty to one count of conspiracy to commit wire fraud in May 2023. Davis will serve two years supervised probation following her release from prison.

A co-defendant, Clintess Roberta Barrett-Johnson, 55, of Durham, pleaded guilty to one count of conspiracy to commit wire fraud and was sentenced to four years’ probation and ordered to pay $57,179 in restitution.

Another co-defendant, Mi’chelle Necole Bell-Johnson, 34, of Charlotte pleaded guilty to one count of conspiracy to commit wire fraud and was sentenced in September to three years of probation and ordered to pay $83,977 in restitution.

https://ncnewsline.com/briefs/former-chatham-county-housing-authority-director-sentenced-to-2-1-2-years-in-prison-for-no-bid-contract-scam/

Jan 30, 2024 Generic Drugs

Over the years, myriad generic drugmakers have had to ante up fines and settlement fees for allegedly colluding on the prices of copycat drugs. Now, Apotex and two of its generics peers have agreed to settle with direct purchasers of their drugs in a price-fixing case that stretches all the way back to 2017.

Apotex plans to settle with the group of direct purchaser plaintiffs for $30 million, while Heritage Pharmaceuticals and Breckenridge Pharmaceutical will hand over $10 million and $5 million, respectively, according to a trio of motions filed Tuesday in the multidistrict litigation in Pennsylvania federal court.

Each of the settlement amounts has the potential to increase or decrease, depending on the outcome of the legal proceedings. Apotex, for instance, could have its settlement fund reduced by up to $3.6 million if certain parties opt out of the deal.

The case stretches back to 2017, when direct purchasers fired off litigation claiming that Apotex and its peers conspired with other, non-settling drugmakers to artificially inflate and maintain prices for certain generic drugs. The plaintiffs said this activity resulted in “supracompetitive prices” that forced them to overpay for medications.

The settlement negotiations with Apotex, Heritage and Breckenridge were “hard-fought, at arm’s length, and spanned many months,” the plaintiffs said in the new motions.  Back in early 2020, for instance, the company agreed to pay a $24.1 million criminal penalty in the culmination of a yearslong generics price-fixing probe by the U.S. Department of Justice. Under the deal, the company also admitted to its behavior and entered a deferred prosecution agreement.  That case centered on pricing levels for pravastatin, a generic cholesterol medication, between May 2013 and December 2015. Apotex admitted to working with other generic companies to artificially inflate the drug’s price, U.S. authorities said at the time.

Aug. 21, 2023:  Price Fixing Generic Drugs

Generic drugmaker Teva agreed increase; green up pointing triangleMonday to pay $225 million to settle criminal charges over price-fixing allegations related to cholesterol medication and other drugs, in what prosecutors said would be the highest fine ever levied for domestic antitrust crimes.  Prosecutors imposed an additional unique remedy on the Israel-based company, requiring its U.S. subsidiary to sell its product line for pravastatin, a commonly prescribed cholesterol drug. Under the agreement with the Justice Department, which needs court approval, Teva also must donate $50 million worth of other drugs to organizations that treat needy patients.

The settlement is structured as a deferred prosecution agreement, which means Teva wouldn’t face prosecution as long as it stays out of trouble for three years. If Teva had pleaded guilty or been convicted in court, it could have been barred from doing business with federal healthcare programs.   Teva said in a statement that it was pleased to resolve the case and believed it could defend itself against civil lawsuits based on the same allegations.

Both Teva and the U.S. division of India-based Glenmark Pharmaceuticals were charged in 2020 with conspiring to raise prices for pravastatin and other generic drugs during a period from 2013 to 2015. Glenmark also agreed Monday to enter a deferred prosecution agreement and pay $30 million to resolve the charges against it, according to the Justice Department.  Like Teva, Glenmark agreed to divest its product line for pravastatin. Under the settlement announced Monday, prosecutors would have to approve the buyers and the terms of the sale.  Glenmark USA President Sanjeev Krishan said the company “has devoted considerable resources to strengthen our compliance practices, ensuring the highest ethical operating standards.”