Generic Drug-Maker Teva Pharmaceuticals To Face Criminal Price-Fixing Charges

The Justice Department was poised Tuesday to file price-fixing charges against Teva Pharmaceutical Industries Ltd. (TEVA) for allegedly conspiring with competitors to raise prices for generic drugs. Ninety percent of drugs dispensed in the United States are generic.

Teva, the world’s largest generic drug-maker by market value, has been under investigation for a year and turned down a settlement that would have required it to pay a criminal penalty, Bloomberg reported, quoting a confidential source.

Five other companies agreed to pay $426 million in criminal penalties for conspiring to keep the prices of certain medications up.

Teva CEO Kare Schultz has denied any wrongdoing by the company.

Forty-four states filed a price-fixing suit against Teva and 19 other generic drug-makers and executives last year, alleging they artificially inflated prices, divvied up markets and rigged bids for more than 100 commonly prescribed generic drugs.

"We have hard evidence that shows the generic drug industry perpetrated a multibillion-dollar fraud on the American people,” Connecticut Attorney General William Tong said at the time.

The threatened federal charges come as cash-strapped Teva is undergoing a $3 billion multiyear cost-cutting effort that has seen it cut 13,000 jobs, dump 23 manufacturing sites, and close 40 offices and laboratories, as well as sell off most of its generic business with Takeda, Fierce Pharma reported.

The U.S. generic drug market was worth $115.2 billion in 2019 and is expected to grow by 5.8% annually. Insurers, including the federal government, push doctors to prescribe generic drugs over branded drugs to save money.

Teva closed down 0.93% Tuesday or 9 cents at $9.54.