Teva Pharma Charged with Antitrust Conspiracy in Generic Pharmaceuticals Industry

Teva, the global pharmaceutical giant, was indicted last week as part of DOJ’s expanding criminal conspiracy investigation focused on illegal price-fixing and customer allocations.

Teva and DOJ sought to resolve the case in advance of indictment but were unable to reach agreement.  DOJ then decided to indict Teva in a broad conspiracy. 

Given the broad legal implications of such an indictment, Teva is unlikely to proceed to trial.  If it is convicted, DOJ would seek to exclude Teva from federal healthcare programs, such as Medicare and Medicaid, and Teva would face potential debarment and suspension from government contract eligibility.

Teva is the seventh company charged in DOJ’s ongoing probe.  DOJ charged Teva’s US subsidiary in a superseding indictment in Philadelphia, Pennsylvania with Glenmark Pharmaceuticals, Apotex Corp., Taro Pharmaceuticals and Sandoz, inc.

The government’s case against Teva is focused on several former executives who are claimed to orchestrate price increases among various competitors for a number of products.  The government has uncovered evidence establishing regular communications among various executives and senior employees.  Some reports have suggested that detailed records were kept among the co-conspirators concerning these communications and coordinated pricing and customer allocation agreements.

Teva is alleged to play a significant role in orchestrating and managing the conspiracy which allegedly involved over 100 products.  The number of drugs includes a wide-ranging list and significant price increases on a single day for a number of the drugs ranging from 1000 to 1500 percent. 

Count One charges Teva, Glenmark, and Apotex of conspiracy to increase prices for pravastin, a cholesterol reducing drug, and other generics.  In May 2017, Apotex plead guilty, entered into a deferred prosecution agreement, paid $24.1 million and is cooperating with the government’s investigation.  Glenmark has denied the allegations and claimed that it plans to fight the charges. 

Count Two charges Teva, Taro (and its former executive Ara Aprahamian), and others of agreeing to raise prices for generic drugs to treat arthritis, seizures, pain, akin conditions and blood clots.  In February 2020, Aprahamian was indicted for his role in the conspiracy with Teva to increase prices for antibiotics and diabetes treatments.  Taro admitted its conduct, entered into a deferred prosecution agreement, and agreed to pay a $205.7 million penalty and cooperate with the government’s ongoing investigation. 

The third and final count charges Teva, Sandoz and others of conspiring to increase prices for generic drugs used to treat brain cancer, cystic fibrosis, arthritis and high blood pressure.  In March 2020, Sandoz admitted its role in the conspiracy, entered into a deferred prosecution agreement, and agreed to pay $195 million in penalties.  Hector Armando Kellum, a former Sandoz executive, plead guilty is agreed to cooperate with the government investigation.

The DOJ investigation is paralleled by civil litigation being conducted by state attorneys general and private plaintiffs, which alleged price-fixing by numerous generic pharma companies involving hundreds of drugs.

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