Teva's US unit charged with generic-drug price-fixing

TEVA Pharmaceutical Industries was charged by the US with conspiring with competitors to raise prices for generic drugs, the most significant case to come out of a years-long investigation of price-fixing by pharmaceutical companies. Teva's US 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 on 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 US are generics. Five other companies have settled charges and agreed to pay a total of US$426 million in criminal penalties, while a sixth was charged in June.

Teva said in a statement that it is "deeply disappointed" that the US 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."

The 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, said a source.

CEO 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. He said the company wouldn't agree to an accord that could limit its ability to sell products in the US.

Teva 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 US investigation, had offered Teva a settlement known as a deferred prosecution agreement, said a source. Such resolutions suspend charges but require a company to admit wrongdoing and cooperate in the probe.

Teva told the government it would only accept a non-prosecution agreement that doesn't require the drugmaker to admit wrongdoing, the source 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 US$26 billion debt load. Previously, the company offered to settle thousands of opioid lawsuits in the US through a US$250 million payment along with a donation of drugs valued at US$23 billion. Experts have said a settlement is still years away, and that the offering of a drug donation is a means for the firm to avoid a hefty cash payment.

In addition to the US 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. BLOOMBERG