TORONTO – The body of Barry Sherman, who co-founded Canada’s largest generic drug company, was found in his Toronto office last week, at age 75. U.S. authorities have since launched a criminal probe.
Last month, Apotex, the pharmaceutical giant that Sherman built to a $5.6 billion market cap through acquisitions, told federal authorities that U.S. competitor Mylan stood accused of fixing the price of generic drugs. Apotex said the company could not comment on individual investigations, but added that the allegations had delayed its own investigations into Mylan.
Apotex had accumulated at least $500 million worth of impounded-drug samples on behalf of U.S. government investigators, a federal law enforcement official said last month. The pricing probe is ongoing, and U.S. authorities were considering charges as a result, the official said.
On Friday, Apotex reported that it had paid $100 million in late February to pursue the case. It said in a news release that it was “confident in the information and data it has collected in this joint-investigation” and said it would continue to cooperate with authorities.
“We are sorry that recent events have come to an end for all involved,” Apotex said in the news release. “Our co-operation with authorities on this investigation has not only been key to its successful conclusion, but to our progress on safety and quality of the supply of products and service to our patients.”
Sherman moved from Canada to the United States, where he made his name building up Mylan.
In May 2016, after The Wall Street Journal broke news of Mylan’s cooperation with investigators, Sherman said the relationship had never compromised his view of Mylan as a “caring, ethical company” whose products were important for Canada and beyond.
In the 1980s, Sherman created Apotex to sell cheap generic medicines in Canada, avoiding the high taxes on drugs in the country. He often went out to pharmacies and drug stores and asked them to stock generic medications like insulin or antibiotics. The trick eventually drew the attention of Canadian regulators. Apotex’s small size made it more vulnerable than big pharmaceutical companies to faking prices for drugs.
The door eventually opened in America for Apotex, which in the 1990s struck lucrative deals with large drug companies. Apotex offered nearly $10 million for a plot of old Walgreens drugstores in 1995, for example, before the U.S. Food and Drug Administration approved a generic version of insulin. Apotex was later able to negotiate with a Walgreens partner to sell its products under the Walgreens name.
As Mylan expanded abroad and was used to buying or building up generic drug companies, the rival joined forces with then-drug company APP Pharmaceuticals to settle antitrust charges over competition with other generic drug companies, including Apotex.
In 2007, APP settled with U.S. and Canadian regulators over the matter with a $139 million payment to settle charges that it engaged in price-fixing, anti-competitive conduct and health and safety concerns.
Now, however, Mylan’s relationship with U.S. regulators has drawn attention. In August, Apotex filed a statement of claim, which is used by companies to sue for costs related to wrongdoing they believe they suffered, in the District of New Jersey. The statement was dated Oct. 10.
No matter how big or small a company is, an allegation of criminal conduct has a chilling effect on business, said William Hurd, a former head of the FTC and head of its Bureau of Competition. “It’s going to be challenging for someone, maybe at a smaller company, or particularly somebody who is a customer, to say this is such a good company, and risk damaging it,” he said.