Facing potential $10B trial loss, Teva seeks appeal of recent ruling in kickbacks case

Teva has spent the last few years working to resolve its wide-ranging opioid litigation and finally reached a multibillion-dollar settlement last year. But quietly in the background, a possible "enterprising-threatening" lawsuit from the U.S. government still looms, Teva's lawyers argued in a recent filing.

In the U.S.' litigation over alleged kickbacks on Teva's once-lucrative multiple sclerosis drug Copaxone, U.S. District Judge Nathaniel M. Gorton recently ruled in favor of the U.S. government on two issues. One is the level of causation required to say that a claim for drug reimbursement is "false," while the other centers on the level of damages Teva might be forced to pay if it loses the case.

In the case, the U.S. alleges that Teva paid two patient foundations, the Chronic Disease Fund and The Assistance Fund, more than $350 million between December 2006 and January 2017. Those payments directly covered Medicare co-pay obligations for patients on Copaxone, the government argues. At the same time, the company raised the price of Copaxone five-fold.

Lawyers for the U.S. say Teva "conspired" with a specialty pharmacy and used the foundations "as conduits to subsidize Medicare co-pays" for its star drug. As the Department of Justice has noted, the Anti-Kickback Statute (AKS) prohibits pharma companies from paying Medicare co-pays so that market forces remain in place, and so there isn't an undue inducement for patients to receive a specific drug.

In mid-July, Judge Gorton made a series of rulings after hearing motions by both sides.

On the causation issue, Judge Gorton sided with the U.S. government and re-iterated the First Circuit Court of Appeals' definition of a false claim, noting that "if there is a sufficient causal connection between an AKS violation and a claim submitted to the federal government, that claim is false within the meaning of the [False Claims Act]."

Under this causation standard, the government must prove a "causal connection" between Teva's payments to the patient foundations and the Copaxone claims under Medicare.

Teva has taken another stance. The company argues the government must prove that the Copaxone claims wouldn't have been submitted to Medicare "but for" its donations to the foundations. The court rejected Teva's causation argument in a mid-July order.

Another key issue is damages. Here, the court ruled that Teva could be on the hook for the entire amount of the alleged false claims.

"The rationale here is that the government simply would not have paid those Medicare claims had it known they were submitted in violation of certain Medicare requirements," Judge Gorton wrote.

After the mid-July rulings, Teva this week filed a motion to appeal the court's finding on the causation issue. If Teva were to prevail in its argument, then the company "would be entitled to summary judgment, averting the need for a six-week jury trial that would consume both the parties’ and the Court’s resources," lawyers for the company wrote.

But if Teva's appeal isn't permitted and the company loses at trial, Teva "faces a judgment that may exceed $10 billion, an enterprise-threatening amount that may render a post-judgment appeal impossible," its lawyers wrote.

Teva is seeking an "interlocutory appeal," or an appeal of a specific issue while the litigation is still playing out. The company wants the U.S. Court of Appeals for the First Circuit to rule on the causation issue before a potential trial.

As it stands, the trial is scheduled to begin in September.