Teva bails on price-fixing settlement in gamble on its role fighting COVID-19: report
Teva had been in discussions with federal prosecutors on a settlement since November. (Teva)
Federal prosecutors turned up the heat in recent months on a generic price-fixing probe that targeted some of the industry's biggest players before COVID-19 slowed the hunt. Teva, the biggest target in that investigation, has reportedly bailed on settlement talks in a decision meant to test the government's resolve.
Teva walked away from negotiations with federal prosecutors, daring the U.S. Department of Justice to pursue criminal price-fixing charges against the drugmaker at a time when it's part of the COVID-19 pandemic response, sources told the New York Times.
Teva is betting that its role in aiding the U.S. coronavirus response, including donating millions of doses of antimalarial hydroxychloroquine sulfate to hospitals, will put the Justice Department in a bind on its decision to file charges, the Times reported.
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The government has claimed some of the biggest players in the generics industry participated in a multiyear price-fixing scheme to control prices on a range of drugs, including some of Teva's branded medicines like aging multiple sclerosis drug Copaxone and migraine therapy Ajovy.
Leveling charges against Teva, the largest producer of generic medicines for the U.S. market, could make it difficult to keep the supply chain at full strength amid the pandemic.
But Teva faces its own pitfalls in walking away. In a note to investors Friday, Bernstein analyst Ronny Gal said Teva's decision to risk a criminal prosecution could put the company "in a tough position" to pursue government contracts and float new debt. In all, Teva could be on the hook for damages worth up to $1 billion, Gal noted, saying that anything in the nine-figure range would be "preferred."
Teva declined to comment. A DOJ spokesperson could not be reached for comment by press time.