Teva Pharmaceuticals Settles for $450 Million Over Kickback and Price-Fixing Allegations
Teva's Agreement to Pay
Teva Pharmaceuticals USA Inc. and Teva Neuroscience Inc., collectively known as Teva, have consented to a $450 million payment to settle claims that they violated the Anti-Kickback Statute (AKS) and the False Claims Act (FCA). This information was released by the U.S. Department of Justice (DOJ). Teva, an Israeli firm with U.S. headquarters in Parsippany, New Jersey, is the largest generic drug manufacturer in the United States. The DOJ determined the settlement amount based on Teva’s financial capacity.
Details of the Settlement
The settlement addresses two alleged kickback schemes. The first accusation is that Teva violated and conspired to violate the AKS and FCA by covering Medicare patients’ copays for the multiple sclerosis drug Copaxone from 2006 through 2017, while simultaneously increasing the drug’s price. The DOJ claimed that Teva collaborated with a specialty pharmacy and two supposedly independent copay assistance foundations to ensure donations were used specifically to cover Copaxone copays for Medicare patients with multiple sclerosis, an action prohibited by law.
The second allegation is that Teva USA conspired with other generic drug manufacturers to fix prices for pravastatin, a widely used cholesterol medication, as well as clotrimazole and tobramycin. Teva USA admitted to conspiring with three other companies to fix prices on certain generic drugs, and paid a criminal penalty of $225 million under a deferred prosecution agreement with the DOJ’s Antitrust Division last year.
Additional Penalties
The $450 million payment to resolve these allegations is in addition to the criminal penalty previously paid under the deferred prosecution agreement. As part of the civil settlement announced, Teva agreed to resolve allegations that the benefits it received from the price-fixing scheme constituted illegal kickbacks.
Principal Deputy Assistant Attorney General Brian M. Boynton, head of the DOJ’s Civil Division, stated that kickbacks designed to induce referrals or purchases of healthcare goods or services distort physician and patient decision-making, thwart competition, and bypass controls put in place to protect federal health care programs. He affirmed the Justice Department's commitment to pursuing those who engage in kickback violations, including drug manufacturers, to ensure that federal health care programs continue to serve the interests of taxpayers and program beneficiaries.
Historic Settlement
This settlement is the largest to date involving pharmaceutical companies allegedly using third-party foundations as conduits to unlawfully pay patient copays. U.S. Attorney for the Eastern District of Pennsylvania Jacqueline Romero highlighted that kickback arrangements by pharmaceutical companies escalate the costs for critical drugs used by citizens and federal health care programs. Since 2017, the United States has collected more than $1 billion from pharmaceutical companies that allegedly used third-party foundations to unlawfully pay patient copays, in addition to today’s settlement, according to the DOJ.
Response from Teva
Teva USA was contacted for a response to the settlement, but no response was received before publication.
Bottom Line
This case highlights the ongoing issue of alleged kickback schemes and price-fixing in the pharmaceutical industry. The substantial settlement paid by Teva, the largest generic drug manufacturer in the United States, underscores the seriousness of these allegations. As consumers and beneficiaries of healthcare services, what are your thoughts on this matter? Please share this article with your friends and consider signing up for the Daily Briefing, which is available every day at 6pm.
