Teva Pharmaceutical Industries, the Israeli multinational company headquartered in Petah Tikva, which has been plagued with a net financial debt of $26.7 billion, a 56% drop in the sales of its Copaxone—an immunomodulator medication used to treat multiple sclerosis, the collapse of its cash flow, and the slow growth of the drugs that were supposed to replace the lost revenues from Copaxone—all of which already threaten its very existence—is now facing two devastating lawsuits filed against it in the US.
On Friday, following a huge lawsuit over the sale of opioid drugs, Teva became a key defendant in a price-fixing antitrust suit filed by filed by 44 US. Teva’s Actavis unit, Novartis AG’s Sandoz, and Taro Pharmaceutical Industries Ltd. are named in the complaint.
The lingering financial troubles, dating back to Teva’s loss of it copyrights on several generic drugs, present enormous challenges for Teva CEO Kåre Schultz, a Danish business executive who was appointed in 2017 based on his rare ability to carry out unsentimental purges of failing companies. But as Teva’s shares have dipped 9% at the opening minutes of the Tel Aviv stock exchange on Sunday morning, with much more to be lost between today and Monday morning at the NY stock exchange, Schultz will be forced to put aside whatever recovery plans he may be forging for his company and devote a considerable part of his time in the coming months and years to rescuing Teva from a legal and PR catastrophe resembling what happened to Deutsche Zeppelin-Reederei on May 7, 1937, one day after its Hindenburg Airship caught fire on its final approach to Lakehurst Naval Air Station, New Jersey.
According to the complaint, filed in federal court in Connecticut, “Teva is a consistent participant in the conspiracies identified in this complaint, but the conduct is pervasive and industry-wide.” The complaint charges that “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.”
According to Bloomberg, Teva helped mastermind a sweeping conspiracy among generic pharmaceutical giants to raise prices for medicines. Or as Connecticut Attorney General William Tong put it in a statement on Friday: “We have hard evidence that shows the generic drug industry perpetrated a multi-billion dollar fraud on the American people. We all wonder why our health care, and specifically the prices for generic prescription drugs, are so expensive in this country — this is a big reason why.”
According to the lawsuit by the 40 states, the defendants inflated the prices of more than 100 drugs. The Justice Department’s antitrust division is conducting its own criminal investigation as you’re reading this report. The states say the pharmaceutical companies conspired to fix prices and carve up markets among themselves, rather that compete with one another on prices.
Several executives named in the lawsuit are connected to Teva, including Maureen Cavanaugh from Lannett Co. who used to be senior vice president for Teva; and David Rekenthaler from Apotex Inc. who was vice president of sales at Teva. Mylan president Rajiv Malik, and James Nesta, Mylan’s vice president of sales, were supposedly engaged in a fight to the death against Teva a few years ago – now they are named as co-conspirators.
The earlier lawsuit against Teva concerns its involvement as a manufacturer and distributor of original and generic narcotic pain relievers (opiates) and its role in promoting the opiates epidemic, which in 2017 caused the deaths of 47,600 Americans from overdoses. Teva is exposed to as much as $3 billion in this case, which opens in an Oklahoma court on May 28.
Oh, the humanity…