(Bloomberg) — Teva Pharmaceutical Industries Ltd. was charged by the U.S. with conspiring with competitors to raise prices for generic drugs, the most significant case to come out of a yearslong investigation of price-fixing by pharmaceutical companies.Teva’s U.S. unit was indicted on charges of participating in three conspiracies to fix prices and allocate customers from May 2013 to December 2015, the Justice Department said Tuesday.Teva, the world’s largest generic-drug maker by market value, is the most high-profile company to be charged in the Justice Department’s probe into allegations that companies conspired with one another to prop up the prices of certain widely used medications. Nine of every 10 prescription drugs dispensed in the U.S. are generics.Five other companies have settled charges and agreed to pay a total of $426 million in criminal penalties, while a sixth was charged in June.“Today’s charge reaffirms that no company is too big to be prosecuted for its role in conspiracies that led to substantially higher prices for generic drugs relied on by millions of Americans,” Makan Delrahim, the head of the department’s antitrust division, said in a statement.Teva’s U.S.-traded shares fell as much as 6% on Tuesday after Bloomberg News reported that the government was planning to charge the company. The stock closed down less than 1% at $9.54. In Tel Aviv, the shares fell 5% early Wednesday.Teva said in a statement that it is “deeply disappointed” the U.S. decided to prosecute it.“Teva firmly rejects the allegations,” the company said. “The DOJ has shown an unwillingness to consider alternatives that would not deeply impact Teva and the stakeholders who depend on the company, including the patients who benefit from our medicines.”Higher PricesThe Justice Department said Teva colluded with competitors to increase prices for medications that treat cholesterol, seizures, pain, skin conditions, blood clots, brain cancer, cystic fibrosis, arthritis and hypertension.The case against Teva, filed in federal court in Philadelphia, came after the Israel-based company rebuffed a settlement that would have required paying a criminal penalty and admitting wrongdoing, according to a person familiar who declined to be named because the investigation is confidential.Chief Executive Officer Kare Schultz said in an interview earlier this month that Teva didn’t engage in price-fixing and that the company was prepared to fight any charges. Schultz said the company wouldn’t agree to an accord that could limit the company’s ability to sell products in the U.S.Teva Is at Center of Drug Price-Fixing Case Filed by StatesTeva also faces an antitrust probe by the European Commission, involving a deal with Cephalon Inc. over a generic version of that company’s sleeping drug modafinil. The commission has said that inquiry is expected to conclude this year.The Justice Department’s antitrust division, which is conducting the U.S. investigation, had offered Teva a settlement known as a deferred prosecution agreement, according to a person familiar with the matter. Such resolutions suspend charges but require a company to admit wrongdoing and cooperate in the investigation.Teva told the government it would only accept a non-prosecution agreement that doesn’t require the drugmaker to admit wrongdoing, the person said.Admitting to wrongdoing would expose Teva to a potentially costly settlement in pending civil litigation tied to the price-fixing allegations. A criminal conviction could bar the company from doing business with Medicare and Medicaid.Investors have long aired their concerns about Teva’s mounting legal exposure in both the generic price-fixing probes, as well as separate suits alleging the company played a major role in the opioid epidemic.Teva is strapped for cash as it attempts to reduce its more than $26 billion debt load. In October, the company offered to settle thousands of opioid lawsuits in the U.S. through a $250 million payment along with a donation of drugs valued at $23 billion. Experts have said a settlement is still years away, and that the offering of a drug donation is a means for the company to avoid a hefty cash payment.Schultz told investors earlier this month that Teva’s liabilities remain difficult to model, though Teva will do its best to avoid “insurmountable financial damage.”In addition to the U.S. case, Teva and other generic-drug makers are grappling with civil lawsuits from a nationwide group of state attorneys general that accuse the companies of colluding to rig prices of drug and allocate customers. One of the lawsuits portrays Teva as masterminding a conspiracy with competitors that led to inflated prices on more than 100 different drugs.(Updates with shares in sixth paragraph, EU probe in 12th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Our mission to help you navigate the new normal is fueled by subscribers. To enjoy unlimited access to our journalism, subscribe today. An examination of the character traits and challenges faced by four U.S. Presidents from one of America’s most prominent historians; a Wall Street Journal bestseller about the mysteries of group behavior; and one of […]
The week of the Georgia senatorial elections, I’ve been following the forecasts by Northwestern University data scientist Tom Miller, who bested most of the polls in the presidential race by missing the margin of Joe Biden’s victory by just 12 electoral college votes. In fact, Miller’s only major wrong call was forecasting a Trump win […]
by Luke Fitzpatrick In an age where loans are harder to come by than ever, it seems behind the times that technology hasn’t already further accelerated an individual’s capacity to explore different methods of funding. With trust in major banks faltering, it makes sense that now is the time for investors and borrowers to explore […]