Teva Abandons Justice Dept Settlement Talks: Report

Teva Pharmaceutical Industries reportedly has abandoned settlement talks with the U.S. Justice Department’s antitrust division over an ongoing generic drug price-fixing investigation. If the probe reaches a criminal indictment against Teva, the company could face a large financial penalty and possible restrictions under Medicare, according to a report on the financial news site Calcalist.com.

According to the report, Teva is betting on the Trump Administration giving it an enforcement pass if the company moves some of its manufacturing operation to the U.S. The White House reportedly is drafting an order that would force manufactures of certain drugs to make the products within the U.S. as a move to have less reliance on international supply chains. Currently, almost 75% raw materials for the U.S. drug industry are produced abroad. Teva hinted that such a shift would require significant waivers and benefits for the company since the U.S. is unable to compete with foreign production costs.

Teva and other generic drug companies have held talks with the federal government over the last year in an attempt to resolve a long-running criminal antitrust investigation into alleged price-fixing (see earlier story). Bloomberg News reported last year that it had learned from sources familiar with the matter that among the possible outcomes could be deferred prosecution agreements in which the companies would admit to certain allegations but would be shielded from indictment in exchange for cooperating with the investigation and paying fines.

Prosecutors reportedly have been investigating allegations that generic drug firms conspired to prop up the prices of certain widely-used medicines for more than five years, and have hinted several times this year that charges could be imminent. Bloomberg said the investigation poses a problem for the government because it wants to make drugs as affordable as possible, and yet a conviction of a generic drug company could lead to it being barred from government healthcare programs, which would drive up costs to the programs. Using deferred prosecution could avoid a conviction that would inadvertently limit competition and increase the prices of common medications, it said.