Nine British pharmaceutical executives have been charged with conspiracy to defraud the NHS, after an investigation by the Serious Fraud Office into price fixing of generic drugs.
Five companies have also been charged with colluding to keep prices high: Goldshield Group, Kent Pharmaceuticals, Norton Healthcare, Generics (UK), and Ranbaxy (UK). All the companies and individuals charged deny wrongdoing.
The Serious Fraud Office’s inquiry, dubbed Operation Holbein, is one of its biggest ever cases, involving up to 150 investigators. Officers raided six companies in 2002. One, Regent-GM Laboratories, has since been wound up. The other five are those charged last week.
The criminal charges relate to alleged price fixing between 1996 and 2000. It is believed that investigators secured the cooperation of a whistleblower—a former marketing manager at Regent-GM—who attended meetings where manufacturers of generic drugs allegedly colluded to restrict supplies.
The drugs involved in the alleged price fixing scheme include warfarin, ranitidine, and several penicillin based antibiotics. Although the sums involved in this case are unknown, a parallel investigation by the NHS counterfraud services has led to a civil suit against seven manufacturers, who are alleged to have defrauded the NHS of £152m ($265m; €220m).
Three of the companies named in that civil suit have settled out of court: the US firm Norton, the Indian firm Ranbaxy, and the British firm Generics. Norton has agreed to pay £13m, Ranbaxy £4.5m, and Generics £12m. The settlements do not include admissions of liability.
A spokesman for the Serious Fraud Office said that the civil settlements will have no effect on the criminal cases.
Norton is the biggest provider of generic drugs in Britain. After the announcement of the companies’ settlement last week, Jim Gee, the director of NHS counterfraud services, said: “The remaining defendant companies should recognise our resolve to press on with the continuing civil proceedings against all of those allegedly concerned in the price fixing arrangements.”
A former Norton director, Jon Close, is one of the executives facing criminal charges. In 1998, as chairman of the British Generics Manufacturers’ Association, he told the parliamentary select committee on health, which was then investigating unusual price movements in generic drugs, “I can honestly say none of us is colluding.”
His solicitor, who is also defending the former Norton director Nick Foster, issued a statement rejecting the allegations: “They have cooperated fully with the SFO [Serious Fraud Office] investigation and have, in lengthy interviews, explained clearly why the allegations are incorrect. The unwillingness of the SFO to recognise the truth and to pursue this prosecution at vast public expense is, they believe, confirmation that this prosecution is politically motivated.”
The other seven executives facing charges are Denis O’Neill and John Clark, both of Kent Pharmaceuticals, Ajit Patel and Kirti Patel, both of the Goldshield Group, Luma Auchi, formerly of Regent-GM, Anil Sharma, formerly of Ranbaxy (UK), and Michael Sparrow, formerly of Generics (UK).
They have been bailed to appear at Bow Street Magistrates’ Court on 27 April. Representatives of the five companies will also attend.