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Teva at the center of alleged scheme to fix generic drugs prices, states say
11 May 2019 00:00
Israel’s Teva Pharmaceuticals, the world’s largest generic drug manufacturer, conspired with more than a dozen other generic drug makers to fix prices on a myriad of generic drugs, attorneys general from 43 states and Puerto Rico said. The allegations, detailed in a new antitrust complaint filed late Friday, outline how Teva and other major generics including Sandoz, Mylan and Pfizer allegedly divided up the US market on more than 100 drugs.
For the past five years, state attorneys general have been investigating the generic drug market. The US Department of Justice’s antitrust division has also been probing the generics market as part of a criminal price-fixing investigation. To date, federal prosecutors have charged two executives from Heritage Pharmaceuticals with price-fixing two drugs, though the probe is ongoing.
In the new complaint filed Friday, the states said Teva and several of its US executives played a key role in raising drug prices since 2012.
“Teva is a consistent participant in the conspiracies identified in this Complaint, but the conduct is pervasive and industry-wide,” the states said. “Through its senior-most executives and account managers, Teva participated in a wide-ranging series of restraints with more than a dozen generic drug manufacturers, all of whom knowingly and willingly participated.”
In December 2016, the states sued Mylan, Teva, Mayne Pharma, Aurobindo Pharma USA, Citron Pharma and Heritage for price-fixing two drugs — the ones that Heritage’s former executives admitted to price-fixing.
In 2017, the states amended that complaint to accuse 18 generic drugs companies of fixing prices on 15 drugs.
Friday’s complaint goes even further, alleging that Teva colluded to raise prices on 86 generics. The complaint also names senior executives at Teva’s US operations: Maureen Cavanaugh, senior vice president and commercial officer; Kevin Green, director of national accounts until 2013; Nisha Patel, who joined Teva in April 2013 and replaced Green; and David Rekenthaler, vice president for sales of US generics.
The states said the new allegations come from six cooperating witnesses who worked at Sandoz, Glenmark and Heritage, as well as a database they compiled of text messages and phone calls between 600 individuals who worked in sales and marketing at the companies.
For 466 pages, the states painstakingly outlined phone calls, text messages and voicemails between rival companies. Patel was a focal point of many of the interactions; before she joined Teva in 2013, Patel served as director of global generic sourcing for drug wholesaler ABC, where she developed relationships with representatives of many generic drug manufacturers.
Rekenthaler also frequently spoke with his counterparts at rival drug companies either by telephone or at golf outings or industry dinners, according to the complaint.
Over the course of 2013, Green, Patel and Rekenthaler spoke or texted competitors more than 1,200 times. Green, and later Patel, would send a short text to their contacts at other companies when they wanted to speak to avoid putting anything in writing. After Rekenthaler warned Patel about the government investigations in 2015, she deleted her text messages with competitors. When Patel’s house was search by federal authorities in 2017, she also called Rekenthaler, even though he was no longer employed at Teva. Rekenthaler then called Cavanaugh and another Teva executive, according to the complaint.
The states alleged that Teva executives knew employees were violating the antitrust laws but never told them to stop. In one incident, Patel mentioned speaking with competitors during a 2013 meeting with Cavanaugh.
“Cavanaugh smiled, put her hands over her ears and pretended she could not hear what was being said,” the complaint said. “Not once, however, did Cavanaugh ever tell defendant Patel or anyone else at Teva to stop conspiring with Teva’s competitors or rescind the agreements that had been reached.”
The complaint doesn’t put a dollar figure on how much the collusion increased prices, but the states said that some drugs increased in price by 1000 percent. Regarding Teva, the states said the company’s net income increased 15 percent in 2015 and its stock began trading at an all-time high.
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