Multinational generic pharmaceutical giant Teva reached a $420 million settlement with shareholders who claimed the company hid a price-fixing scheme and artificially inflated share prices.
According to the suit, filed in federal court in Connecticut, the price-fixing activity allowed the company to raise some drug prices by more than 1000 percent.
The outcome ranks as one of the top five all-time costliest settlements arising from securities violations in the pharmaceutical industry, according to the plaintiffs’ counsel.
Denial Of Wrongdoing
Despite paying the historic settlement, Teva admits to no wrongdoing concerning the price-fixing claims. “Settlement of the matter reflects the general interest of Teva and of the patients who continue to rely on us daily for the largest generic drugs portfolio in the world,” said a spokesperson. The company claims that insurance coverage will pay for most of the settlement.
One Piece Of A Larger Alleged Conspiracy
Teva’s legal problems regarding price-fixing allegations date back to 2016 when shareholders sued amidst government investigations into a number of pharmaceutical companies. The Department of Justice sued Teva in 2020 and indicted the pharma company on three counts of criminal conspiracy for its alleged leading role in a coordinated scheme that involved several companies that sell generic drugs.
Avoid Costly Mistakes
The settlement underscores the importance of due diligence in meeting reporting requirements, especially in heavily regulated industries. The above-mentioned lawsuit alleges that company leaders coordinated their activities in informal settings such as lunches and over games of golf in an effort to eliminate a paper trail. In most cases, such efforts at concealment only generate more allegations and harsher consequences.
Investigations by the DOJ, SEC and other government agencies can often be avoided by implementing thorough auditing policies and procedures. When such investigations do arise, it is important to meet them with the urgency they require. If you have questions or concerns about SEC rules and regulatory issues, we encourage you to contact the securities law attorneys at Ford O’Brien Landy LLP. We advise and represent clients in New York and nationwide.
Sources: Law360, “Teva Reaches $420M Deal To End Investors’ Price-Fixing Suit,” January 18, 2022; New York Times, “Teva and Other Generic Drugmakers Inflated Prices Up to 1,000%, State Prosecutors Say,” May 11, 2019