The U.S. Department of Justice alleged that Teva violated the Anti-Kickback Statute and the False Claims Act. The payment is in addition to the criminal penalty paid by Teva USA under its deferred prosecution agreement.
Teva Pharmaceuticals on Thursday settled allegations that it ran a kickback scheme to improve the sales of its multiple sclerosis therapy Copaxone (glatiramer acetate injection) and that it conspired with other generics developers to fix drug prices.
Teva has agreed to pay $425 million to resolve the kickback claims, plus another $25 million to settle the price-fixing allegation. The aggregate settlement value of $450 million was determined according to Teva’s ability to pay based on its financial statements, per a press release issued by the Department of Justice (DOJ).
The settlement does not mean that Teva has admitted liability in the matter, nor does it constitute a concession by the U.S. government—the plaintiff that brought these complaints against Teva—that its cases are unfounded, DOJ’s announcement stated.
The kickback case against Teva started in August 2020, when the DOJ filed a False Claims Act complaint against the company alleging that it “illegally” paid Medicare co-pays for Copaxone in a bid to raise the drug’s sales. According to the complaint, Teva funneled these kickbacks through two purportedly independent charities—The Assistance Fund and Chronic Disease Fund—which it paid to cover patients’ co-pays.
Teva also involved one of its vendors, Advanced Care Scripts, a specialty pharmacy and through which the pharma referred “virtually all” of the Copaxone patients with co-pays. While the alleged kickback scheme was running, from 2007 through 2016, Teva hiked the price of Copaxone from around $17,000 per year to $73,000 per year, according to the DOJ.
At the time, Andrew E. Lelling, U.S. Attorney for the District of Massachusetts, claimed in a statement that Teva paid “hundreds of millions of dollars in kickbacks, all while raising the price of its drug, Copaxone, at a rate over 19 times the rate of inflation.” The scheme “undermined the Medicare program’s co-pay structure,” Lelling said.
A week later, DOJ slapped Teva with three counts of drug price-fixing. According to the complaint, Teva engaged in three pricing conspiracies from as early as May 2023 to around December 2015, where the company colluded with other drug manufacturers to fix prices for generic drugs, rig bids and allocate customers. As a result, consumers were likely overcharged by at least $350 million, according to DOJ.
In August 2023, Teva reached a $225 million deferred prosecution agreement allowing the company to avoid a mandatory exclusion from federal healthcare program—the potential punishment had Teva chosen to go to trial and was found guilty. Under the agreement, the company will pay $22.5 million tranches from 2024 to 2027, culminating in a $135 million lump sum in 2028.
