Health Law Daily Wrap Up, ANTITRUST—SETTLEMENT AGREEMENTS: Teva to pay combined $450 million to settle federal price-fixing, kickback allegations, (Oct 15, 2024)

By Christopher M. Longo, J.D.

The settlement agreements with Teva resolve allegations that it conspired to fix prices for three generic drugs and entered a kickback scheme regarding its multiple sclerosis drug Copaxone.

The Department of Justice announced that it has entered into a settlement agreement with Teva Pharmaceuticals USA, Inc., on behalf of the HHS Office of Inspector General (OIG), the Defense Health Agency (DHA), the Department of Defense, and the Department of Veterans Affairs (VA), to resolve allegations that Teva conspired with other generic drug manufacturers to fix prices for three generic drugs, in violation of the Anti-Kickback Statute (AKS). Under the settlement agreement, Teva will pay $25 million to resolve the matter. The DOJ also entered into a $425 million settlement agreement with Teva Pharmaceuticals USA, Inc., and Teva Neuroscience, Inc. to resolve allegations filed in the District of Massachusetts that Teva “violated and conspired to violate” the AKS and False Claims Act (FCA) by paying Medicare patients’ copays for the multiple sclerosis drug Copaxone from 2006 through 2017, “while steadily raising Copaxone’s price” (U.S. v. Teva Pharmaceuticals USA, Inc., No. 20-cr-200-RBS (E.D. Pa. October 10, 2024), United States v Teva Pharmaceuticals USA, Inc. and Teva Neuroscience, Inc., No. 20-cv-11548 (D. Mass. October 10, 2024)).

Teva had previously been indicted in the Eastern District of Pennsylvania for “conspiring to suppress and eliminate competition by allocating customers, rigging bids, and fixing and maintaining prices, in violation of the Sherman Antitrust Act, 15 U.S.C. § 1.” The DOJ alleged that the company “conspired with other generic drug manufacturers to fix prices for pravastatin, a drug widely used to treat high cholesterol and triglyceride levels, as well as two other generic drugs, clotrimazole and tobramycin.” Teva entered into a deferred prosecution agreement with the DOJ’s Antitrust Division to resolve the allegations, “paid a criminal penalty of $225 million,” and admitted to conspiring to fix prices on certain generic drugs. Under the $25 million settlement agreement, Teva “resolve[d] allegations that the benefits it received under its price fixing scheme constituted illegal kickbacks.”

Kickback scheme. In the action filed in the District of Massachusetts, the DOJ alleged that Teva conspired with third-party foundations, Chronic Disease Fund, Inc. and The Assistance Fund, Inc., and a specialty pharmacy to “to ensure that purported donations to the foundations were used specifically to cover the copays of Medicare Copaxone patients,” in violation of the AKS. These actions were allegedly done at the same time that the company was “steadily raising Copaxone’s price.” The DOJ alleged that this “caused the submission of false claims to Medicare for Copaxone under False Claims Act.” Under the settlement agreement with the DOJ, Teva will pay $425 million to resolve the matter.

U.S. Attorney Jacqueline Romero for the Eastern District of Pennsylvania stated that “[k]ickback arrangements by pharmaceutical companies escalate the costs for critical drugs used by our citizens and federal health care programs.” She added, “We will continue to take action to lower the drug costs for our country and its health care programs supporting senior citizens, our military service members and others.” Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts stated that Teva “gamed the charitable foundation process by paying kickbacks through two foundations, and with the aid of a specialty pharmacy,” and that those kickbacks “undermined the purpose of the Medicare co-pay system and violated the Anti-Kickback Statute.”

In its press release, the Justice Department noted that since 2017, the United States “has collected over $1 billion…from pharmaceutical companies that allegedly used third-party foundations as conduits to unlawfully pay patient copays.” The agency added that Teva's settlement “is the largest of these settlements to date,” and that “[t]he settlement of Teva’s price fixing conduct is the seventh pertaining to allegations of price fixing involving generic drugs, with total recoveries exceeding $500 million.”

Companies: Teva Pharmaceuticals USA, Inc.; Teva Neuroscience, Inc.

CIAsSettlementAgreements: SettlementAgreementsNews AntikickbackNews AntitrustNews FCANews GenericDrugNews