A Tarnished Heritage

A three-year suspension has been imposed by the New Jersey Supreme Court for conduct described in the report and recommendation of the Disciplinary Review Board

During the relevant period, respondent was a patent attorney registered to practice before the USPTO, as well as the founder, Chief Executive Officer, and Chairman of Heritage Pharmaceuticals (Heritage), an entity organized and existing under the laws of Delaware with its principal place of business in Eatontown, New Jersey. At the time, Heritage was a subsidiary of Emcure Pharma, Ltd. (Emcure), and conducted the U.S. commercial operations of Emcure, a generic pharmaceutical company headquartered in India. Specifically, Heritage engaged in the acquisition; licensing; production; marketing; sale; and distribution of generic pharmaceutical products, including doxycycline hyclate and glyburide, and was engaged in the sale of those drugs in the United States.

From April 2013 until December 2015, respondent led a conspiracy with at least five other people, as well as other entities involved in the production and sale of generic pharmaceutical products, to suppress and eliminate competition in the market for doxycycline hyclate and glyburide sold in the United States.

Specifically, in furtherance of the conspiracy, respondent and his coconspirators, including individuals he supervised at Heritage, engaged in discussions and attended meetings with co-conspirators involved in the production and sale of doxycycline hyclate and glyburide. During such discussions and meetings, agreements were reached to allocate customers, rig bids, and fix and maintain prices of both drugs sold in the United States.

The business activities of Heritage and the co-conspirators in connection with the production and sale of doxycycline hyclate and glyburide were within the flow, and substantially affected, interstate and foreign trade and commerce. During the relevant period, the affected volume of commerce based on the sales of doxycycline hyclate and glyburide totaled approximately $1.6 million.

On December 12, 2016, the United States Department of Justice, Antitrust Division, along with the United States Attorney’s Office in the Eastern District of Pennsylvania, filed a two-count information against respondent charging him with conspiracy to unreasonably restrain trade or commerce, in violation of the Sherman Antitrust Act, 15 U.S.C. § 1.

On January 9, 2017, respondent pled guilty to both counts of the information, in accordance with the plea agreement he had executed on December 9, 2016.

Sanction

Here, like the attorneys in Rothman, May, and Stein, respondent engaged in anti-competitive conduct, in violation of the Sherman Antitrust Act, by participating in a two-year conspiracy to allocate customers, to rig bids, and to fix and maintain pricing of two generic drugs. Also like the attorneys in those matters, respondent cooperated with the government and was sentenced to a one-year term of probation, a significant downward departure from the sentencing guidelines. Further, like Rothman and Stein, respondent has no prior discipline in a lengthy career at the bar.

Thus, based upon the foregoing precedent, we conclude that the baseline discipline for respondent’s misconduct is a three-year suspension. To craft the appropriate discipline, we also consider mitigating and aggravating factors.

In mitigation, respondent has no prior discipline in his twenty-six years at the bar. In re Convery, 166 N.J. 298, 308 (2001). Further, he cooperated fully with the authorities in both his criminal and disciplinary matters; admitted his wrongdoing; immediately notified the OAE of his guilty plea; and entered into a disciplinary stipulation.

In aggravation, respondent’s scheme to rig bids and fix prices undoubtedly harmed countless individuals who needed the medications to treat diabetes or to combat infection. As the government emphasized in the criminal proceeding, the impact of the price fixing is incalculable when considering the potential extent of the use of the drugs across the country. Moreover, many Americans rely on generic pharmaceuticals to be priced lower than the brand name versions as a means of maintaining access to the medications.

(Mike Frisch)