Teva to pay $225 million in penalties and sell generic drugs to resolve price-fixing

Boxes of tablets manufactured by Teva Pharmaceutical Industries.

Chris Ratcliffe | Bloomberg | Getty Images

drug manufacturer Teva Pharmaceuticals agreed to pay $225 million in penalties over five years and divest his version of a generic cholesterol drug to resolve charges related to price-fixing for this drug and other widely used treatments, the Justice Department announced on Monday.

Teva, in one press release Montag announced that it will pay $22.5 million each year from 2024 to 2027 and $135 million in 2028.

Glenmark Pharmaceuticals will pay $30 million to resolve similar allegations. The cases are linked to pravastatin, a prescription drug that lowers cholesterol and helps prevent heart attacks and strokes.

It is the latest solution in a series of price-fixing cases involving competitors colluding to artificially fix the price of a product.

Since 2020, the DOJ Antitrust Division has indicted five other drug companies for participating in similar programs involving multiple generic drugs. Monday's settlement means seven companies have settled their criminal complaints and collectively agreed to pay more than $681 million in penalties.

“Today, the Antitrust Division and our law enforcement partners hold two other drug companies responsible for raising the prices of essential drugs and denying Americans affordable access to prescription drugs,” said Jonathan Kanter, assistant attorney general for the DOJ's Antitrust Division. in a press release.

The agreements are stay-of-prosecution agreements, which means that the two companies will not face trial or criminal penalties in this case if they comply with the terms of the agreements. If Teva and Glenmark are convicted, they likely face mandatory bans from federal healthcare programs, according to the DOJ.

Teva has also agreed to donate two price-fixing generic drugs worth US$50 million to humanitarian organizations that provide medicines to Americans in need. The company said that was the case during a earnings call earlier this month Set aside $200 million to clear up the DOJ's price-fixing allegations.

“Teva has robust and consistent compliance controls designed to prevent this type of activity from happening again and is committed to that commitment [deferred prosecution agreement]to maintain these controls going forward,” the company said in its press release, adding that it was “delighted to move beyond these allegations.”

Glenmark did not immediately respond to CNBC's request for comment.

As part of Monday's deals, Glenmark admitted to being involved in a pravastatin pricing program. Meanwhile, Teva admitted participating in three price-fixing deals involving pravastatin and two other drugs: clotrimazole, used to treat skin infections, and tobramycin, a drug commonly prescribed to treat eye infections.

The DOJ indicted Glenmark in June 2020 in a lawsuit filed in the Eastern District of Pennsylvania on one count of price fixing. That complaint alleged that Glenmark and other companies made $200 million through the illegal scheme.

In August, a grand jury in the Eastern District of Pennsylvania returned a replace the charge against Glenmark and Teva for the same conduct and similar actions.

In one case it was alleged that Teva was collaborating with Glenmark, another company called Apotex Corp. and others collaborated to increase the prices of pravastatin and other generic drugs. Apotex admitted its role in the scheme and in May 2020 agreed to pay a $24.1 million penalty.

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