Teva Pharmaceuticals Deferred Prosecution Agreement

One option on the table, according to Bloomberg, are deferred law enforcement agreements that could benefit the federal government, because criminal convictions of generic drug manufacturers have been circumvented with federal payers. If companies could not do business with Medicare and Medicaid, competition would dwindle and generic drug prices could rise. But such transactions would also benefit drug manufacturers, who could continue to sell to federal authorities. As part of the deal, Teva will have to pay more than $236 million in disgorgement and interest to the SEC, plus a $283 million fine in a deferred court deal with the U.S. Department of Justice. Teva must maintain an independent corporate monitor for at least three years. Count One accuses Teva, Glenmark and Apotex of conspiring to raise the prices of pravastin, a cholesterol-lowering drug, and other generic drugs. In May 2017, Apotex pleaded guilty, entered into a deferred law enforcement agreement, paid $24.1 million and cooperated with the government investigation. Glenmark denied the charges and said it intended to fight the charges.

The government`s case against Teva focuses on several former executives who claim to orchestrate price increases between different competitors for a number of products. The government has uncovered evidence that allows for regular communication between executives and senior management. Some reports indicate that the co-conspirators kept detailed records of these communications and the coordination of awarding agreements and clients. Novartis reached a separate agreement with the DOJ in March and agreed to pay $195 million, bring lawsuits and cooperate with prosecutors. The Swiss drug manufacturer and its generic unit Sandoz immediately became the largest fish to date. Teva is the seventh company to be charged with participating in price-fixing, bid-fixing and generic drug conspiracies. Five previous cases have been resolved through deferred prosecution agreements, and Teva`s co-conspirator, Glenmark, is awaiting trial. Four leaders were also charged; Three have pleaded guilty and one is awaiting trial. Count Two accuses Teva, Taro (and his former executive Ara Aprahamian) and others of agreeing to increase the price of generic drugs for the treatment of arthritis, seizures, pain, diseases and blood clots. In February 2020, Aprahamian was indicted for his role in the conspiracy with Teva to raise the price of antibiotics and diabetes treatments. Taro acknowledged his behavior, reached an agreement on the adjourned prosecutions and agreed to pay a $205.7 million fine and cooperate with ongoing government investigations. In July, Taro Pharma became the youngest company to join these ranks and secure a $419 million deal to postpone the prosecution and call the state a witness in the investigation.

The third and final count accuses Teva, Sandoz and others of conspiring to raise the price of generic drugs for the treatment of brain tumour, cystic fibrosis, arthritis and hypertension. In March 2020, Sandoz acknowledged his role in the conspiracy, reached an agreement on the lawsuits and agreed to pay $195 million in penalties. Hector Armando Kellum, a former sandoz director, pleads guilty and is willing to cooperate with government investigations. “In these difficult times, it is absolutely necessary for our pharmaceutical companies to do business with consumer welfare,” said Acting Special Representative Steven Stuller in the United States.

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