Generic Pharmaceutical Company Pays $25 Million to Resolve False Claims Act Liability for Price-Fixing of Generic Drugs

PHILADELPHIA – U.S. Attorney Jacqueline C. Romero announced that Teva Pharmaceuticals USA, Inc., a generic pharmaceutical manufacturer located in Parsippany, New Jersey, has agreed to pay $25 million to resolve its alleged liability under the False Claims Act for conspiring to fix prices and allocate markets for two generic drugs. This settlement is one part of an overall resolution, for a total payment of $450 million, based on Teva’s ability to pay, of allegations of this and another kickback arrangement.

The government alleged that, between May 1, 2013 and December 31, 2015, Teva paid and received compensation prohibited by the Anti-Kickback Statute through arrangements on price, supply, and allocation of customers with other pharmaceutical manufacturers for two generic drugs manufactured by Teva, pravastatin and tobramycin. Pravastatin is widely used to treat high cholesterol and triglyceride levels, and tobramycin is an antibiotic.

“Kickback arrangements by pharmaceutical companies escalate the costs for critical drugs used by our citizens and federal health care programs,” said U.S. Attorney Romero. “My office is proud to work with the rest of the Department of Justice and our investigative partners to enforce federal laws prohibiting kickback arrangements. We will continue to take action to lower the drug costs for our country and its health care programs supporting senior citizens, our military service members, and others.”

“Kickbacks designed to induce referrals or purchases of healthcare goods or services distort physician and patient decision-making, thwart competition, and bypass controls put in place to protect federal health care programs,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Department of Justice’s Civil Division. “The Department is committed to pursuing all those who engage in kickback violations, including drug manufacturers, to ensure that these federal health care programs continue to serve the interests of taxpayers and program beneficiaries.”

“Conspiring to raise prices on generic medications is illegal and could prevent patients from being able to afford their needed prescription drugs. Americans have the right to purchase generic drugs set by fair and open competition, not collusion,” said Maureen R. Dixon, Special Agent in Charge of the Philadelphia Regional Office of the Inspector General, Department of Health and Human Services (HHS-OIG). “HHS-OIG will continue to work with our law enforcement partners to investigate allegations of health care fraud that put the public and the Medicare program at risk.”

“The Defense Criminal Investigative Service (DCIS), the law enforcement arm of the Department of Defense Office of Inspector General, seeks to protect the integrity of TRICARE, the healthcare system for U.S. military members and their dependents,” said Special Agent in Charge Patrick J. Hegarty, DCIS Northeast Field Office. “When pharmaceutical corporations artificially inflate prices, they place an unnecessary financial burden on the TRICARE program. The settlement agreement announced today demonstrates our commitment to partner with investigative agencies and the Department of Justice, including the Civil Division and the U.S. Attorney’s Office for the Eastern District of Pennsylvania, to combat healthcare fraud.”

The Anti-Kickback Statute prohibits companies from receiving or making payments in return for arranging the sale or purchase of items such as drugs for which payment may be made by a federal health care program. These provisions are designed to ensure that the supply and price of health care items are not compromised by improper financial incentives. This settlement reflects the important role of the False Claims Act to ensure that the United States is fully compensated when it is the victim of kickbacks paid to further anticompetitive conduct.       

Teva previously entered into a deferred prosecution agreement with the Department’s Antitrust Division to resolve related criminal charges. Teva agreed to pay a criminal penalty of $225 million based on its ability to pay and admitted to agreeing with competitors to refrain from submitting bids and offers to sell drugs to certain customers. The civil settlement payment announced today is in addition to the criminal penalty paid by the company.

This civil settlement is the seventh resolution arising from the Department’s investigation of price fixing by generic drug manufacturers and was handled by the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Commercial Litigation Branch (Fraud Section) of the Department of Justice’s Civil Division, with support from HHS-OIG, the Defense Health Agency Program Integrity Office, DCIS, and the Office of Inspector General for the Department of Veterans Affairs.

The investigation and resolution of this matter illustrate the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

The matter was handled by Assistant U.S. Attorneys Landon Y. Jones III, Rebecca S. Melley, and Anthony D. Scicchitano of the U.S. Attorney’s Office, along with Senior Trial Counsel Jennifer L. Cihon and Senior Litigation Counsel Laurie A. Oberembt of the Civil Division.

Except for those facts admitted to by Teva in the deferred prosecution agreement, the claims resolved by the civil settlement are allegations only, and there has been no determination of liability.