Teva Walks Away from Negotiations Over Healthcare Fraud Charges

The Department of Justice will soon decide whether to charge Teva Pharmaceuticals for an alleged healthcare fraud scheme to fix prices of certain generic medicines. But the company isn’t concerned, especially in the midst of the COVID-19 pandemic, according to national news sources.

The healthcare fraud investigation centers on allegations that Teva and multiple rivals illegally worked together to increase prices for widely used generic drugs like pravastatin, which is used to treat high cholesterol.

Teva dominated the market for drugs whose prices rose and remained high, and almost every attorney general and the Justice Department’s antitrust division have identified Teva as a leading player in the alleged price-fixing conspiracy,. 

But according to a report from The New York Times, as one of the largest suppliers of generic drugs in the US, Teva isn’t concerned with the charges, especially in the midst of the COVID-19 pandemic when medicines and supplies are greatly needed.

Teva manufactures inexpensive generic drugs and its brand-name products such as Copaxone for multiple sclerosis (MS) and Ajovy, for migraines. Officials at Teva voiced that if found guilty, the charges have the potential to cripple the company and leave it unable to sell drugs to federal programs, including Medicare. 

Until recently, Teva’s lawyers had been making settlement negotiations with officials in the DOJ’s antitrust division. 

But the pharmaceutical company maintains that it has done nothing wrong and will defend themselves until the end. 

Teva executives said that they believe the Trump Administration will back down from the fight to avoid the impression that it is harming a company that is helping the US fight the coronavirus.

On March 24, Roberto Mignone, reached out to the White House to help get the company’s hydroxychloroquine supplies out of India and “permit Teva to coordinate with rival drug companies to make and distribute the drugs.”

“Teva positioned itself as a valuable partner in the manufacturing and distribution of potential medical treatments for the coronavirus,” according to individuals familiar with the discussions, who weren’t authorized to speak publicly about them.

Teva officials said there was no connection between the White House conversation and the antitrust investigation.

Teva makes 10 percent of generic drugs prescribed in the US, . Because of this, the company has leverage in negotiating with the federal government, especially during the pandemic, when the supply of vital drugs has decreased, the New York Times report stated.  

A DOJ lawyer who couldn’t speak on the situation before told the national news source that while prosecutors were aware they could seriously harm a major drug company during a pandemic, they were also worried about giving a company a pass for illegal behavior simply because of a national emergency.

Teva also voiced fears of their own if the case doesn’t go the way they planned. If an indictment occurred, it would likely crush the company’s stock price. 

“A criminal conviction would bar Teva from selling drugs to federal health care programs for at least five years. Avoiding such an outcome was a top priority for Teva, and a settlement seemed close at hand this spring, according to the people on both sides of the negotiations.,” New York Times said. 

The Justice Department was inking settlements with other players in the alleged price-fixing conspiracy. In March, the DOJ charged generic pharmaceutical company Sandoz Inc. for fixing generic drug prices, rigging bids, and other antitrust conspiracies.

Sandoz entered a deferred prosecution agreement to resolve the charge and paid $195 million criminal penalty. The company also admitted to the monetary damages identified by the federal government.