'Uninhibited' price hikes, lobbying and more: Congressional probe gives detailed look into Teva's long run with Copaxone

Although Teva lost exclusivity for its lucrative multiple sclerosis drug Copaxone a while back, the company repeatedly raised prices for years and used aggressive strategies to grow its market and fend off competition, a new congressional report (PDF) finds.

After reviewing 300,000 pages of Teva’s internal documents, the House Committee on Oversight and Reform on Wednesday released a 55-page report detailing Teva's history of price hikes for Copaxone, along with the company's efforts to fight potential pricing reform and its strategies to fight competition. The report’s release comes as Teva CEO Kåre Schultz heads to the committee to testify. 

Teva launched Copaxone in 1997 and raised the multiple sclerosis med’s price 27 times over the years to nearly $70,000 per year, the committee found. For a patient on Medicare last year, annual out-of-pocket costs were $6,672 at median, even though Mylan launched a generic in October 2017. 

The price hikes fueled significant revenue growth over the years that in turn boosted executive pay, the committee found.

In fact, Teva’s employees knew Copaxone’s high prices boosted exec pay. After the company scored a temporary reprieve from generic competition in February 2017, one exec wrote to colleagues the delay “[m]ight be good for cash flow and debt pay down and some of your bonuses,” according to the report. 

RELATED: Mylan decimates the list price of its Copaxone copy. But why?

Teva targeted the U.S. for high prices because the federal government can’t negotiate drug prices, the committee concluded. In 2015, the net price for Copaxone 40 mg/ml was $126 per day in the U.S. compared with $33 in Germany, $26 in Spain, $25 in the U.K. and $18 in Russia.

In a 2016 internal presentation, the company acknowledged that one of its strengths was the power to “increase prices successfully.” But as threats to limit pharma's pricing freedom started circulating widely in Washington over the past few years, Teva became active in efforts to defeat potential reforms.

 As the Trump administration weighed measures to lower costs, Teva’s documents showed a “deep concern” about Congress allowing the federal government to negotiate prices, the report said. The company launched a “Drug Price Task Force” and “engaged in an intense lobbying campaign” to defend against the proposal, spending $11.6 million between 2017 and 2020 to lobby Congress. 

Teva leaders also met with senior Trump administration officials and worked with trade group PhRMA to defeat pricing reforms, according to the report.

The company used foundation donations as "investments" to boost sales in Medicare, the committee said, and viewed its copay-assistance program as a profit driver.

While Copaxone's prices grew significantly over the years in the U.S., Teva also had to lower certain prices in Australia, France and Canada. The Canada reduction raised internal concerns that the move would “harm the situation” in the U.S. “due to the large difference in price levels," executives wrote.

For years, the drug industry has defended itself against criticism of drug prices by arguing that research is expensive and risky and that rebates to middlemen have been growing. Those factors weren’t in play for Copaxone price hikes, the committee found.  

In fact, after reviewing internal manufacturing expenses, the committee concluded that Teva’s cost of goods sold for Copaxone was between 0.5% and 3% of the medicine’s net price. From 2013 to 2018, the company’s manufacturing costs “declined significantly” while Teva raised prices. 

On the research side, the company was “unable to identify any R&D expenditures related to Copaxone after 2015,” the committee said. Since 1967, Teva identified $689 million on Copaxone-related R&D costs, or about 2% of its $34.2 billion in revenue from the drug between 2002 and 2019. 

RELATED: Teva forks over $54M to settle Copaxone, Azilect kickbacks suit

Teva's aggressive strategies didn't stop at price hikes and lobbying, the committee said. Facing the threat of losing exclusivity several years back, the company in 2014 introduced a new dosage strength and raised the price of the old dosage to induce patients to switch over. The tactic cost the U.S. healthcare system between $4.3 billion and $6.5 billion, experts found. 

Once Mylan’s generic hit the market in the fall in 2017, Teva used numerous strategies—including exclusive deals with middlemen, lobbying doctors and patient financial programs—to keep patients on the patent-protected dosage, the congressional report said.

Even after Copaxone lost its exclusivity, the company’s own employees had trouble paying for the drug. In July 2018, one employee said she couldn’t afford the $1,673 out-of-pocket expenses for Copaxone over $12 for Mylan’s generic. The company eventually “gave the employee free product, a solution unavailable to most Copaxone patients,” the report said. 

Aside from the Teva findings, the committee released another report detailing Celgene and Bristol Myers Squibb's strategies for Revlimid. See coverage of that report here.