US Indicts Teva Pharmaceutical In Generic Drug Price-Fixing Case
The Department of Justice on Tuesday indicted Teva Pharmaceutical Industries Ltd’s (NYSE: TEVA) United States unit for conspiring to fix prices, rig bids, and colluding with other companies to allocate customers for generic drugs.
What Happened: The indictment filed in the U.S. District Court for the Eastern District of Pennsylvania alleges the drugmaker took part in three conspiracies between early May 2013 to around December 2015, according to a statement issued by the Justice Department.
Prosecutors allege that the generic drugmaker along with Glenmark USA, Apotex Corp, and others worked with each other to raise prices of the commonly prescribed cholesterol drug Pravastatin.
In another count, the Justice Department alleges Teva, Taro Pharmaceuticals Inc (NYSE: TARO), and co-conspirators agreed to increase prices, rig bids and clloded to allocate customers for generic drugs, including those used for arthritis, seizures, pain, skin conditions, and blood clots.
The final count relates to conspiring with Novartis AG’s (NYSE: NVS) subsidiary Sandoz, and others, where the company allegedly manipulated prices, rigged bids, as well as allocated customers for brain cancer, cystic fibrosis, arthritis, and hypertension drugs.
Why It Matters: Each charge carries a statutory minimum penalty of $100 million for the companies. The maximum fine may be raised to twice the gain derived from the crime or twice the loss suffered by the victims if the amount is greater than $100 million, according to the Justice Department.
Most of the companies named in the statement have reached deals with the prosecutors including Sandoz, which agreed to pay a $195 million criminal penalty and Taro which agreed to pay $205.7 million.
The Israel-based drugmaker met with Justice Department officials and tried to persuade them not to bring a case and was reportedly averse to a settlement, reported the Wall Street Journal.
In February, federal prosecutors indicted a former Taro executive, Ara Aprahamian, for price-fixing and bid-rigging.
Teva is one of the larger drugmakers by revenue and recorded $17 billion in sales last year. In addition to the monetary penalties, it stands to be excluded from federal health care programs, should it be convicted, the Journal noted.
The pharmaceutical firm along with other drugmakers are also facing drug price-fixing charges since 2016 filed by a coalition of states.
Price Action Teva shares closed nearly 0.9% lower at $9.54 on Tuesday and fell almost 4% to $9.16 in the after-hours session.
Photo courtesy: Teva Pharmaceutical Indisutries via Flickr
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