Teva pays up $520M to settle bribery charges

Dive Brief:

  • Teva Pharmaceutical Industries, already embroiled in a sweeping lawsuit over generic drug price-fixing, has agreed to pay the U.S. government $519 million to resolve criminal charges connected to bribery schemes in Russia, Ukraine and Mexico. 
  • According to a statement released Thursday by the Department of Justice, the Israeli drugmaker admitted to bribing foreign officials in those three countries in an effort to boost sales and increase market share. 
  • Teva entered into a deferred prosecution agreement with the DOJ, paying over $283 million in a criminal penalty. Additionally, per a settlement deal, Teva will also pay $236 million to the Securities and Exchange Commission. 

Dive Insight:

Teva has had a rough end to 2016.

Last week, the Israeli company was one of six generic drugmakers named in a lawsuit brought by 20 state attorneys general alleging a conspiracy to goose prices and limit competition. While the suit focused on only two specific drugs, the states uncovered evidence pointing to a broader set of conspiracies involving other drugs.

The settlement and fines announced Thursday relate to bribery schemes which, in some cases, lasted a decade or more. 

"Teva and its subsidiaries paid millions of dollars in bribes to government officials in various countries, and intentionally failed to implement a system of internal controls that would prevent bribery," said Assistant Attorney General Leslie Caldwell.  

In Russia, for example, Teva executives and employees of a local subsidiary bribed a high-ranking Russian government official, pushing the official to increase sales of Teva's best-selling multiple sclerosis drug Copaxone (glatiramer) in annual drug purchase auctions.

Teva's efforts were effective too — the company earned more than $200 million in sales of Copaxone to a distribution company owned by the Russian official.

The drugmaker followed a similar strategy in Ukraine, influencing a single government official at the Ukrainian Ministry of Health to help smooth approval of Teva's products in the country. 

"While the conduct that resulted in this investigation ended several years ago, it is both regrettable and unacceptable, and we are pleased to finally put this matter behind us," said Erez Vigodman, Teva’s president and CEO, in a statement. 

Teva has previously said it already put aside $520 million in anticipation of the penalty. 

Still, the revelations sting, especially as the generic price-fixing investigation looks set to continue. Vigodman has said he is focused on making a "culture of compliance" central to Teva's business. While the charges in both the state lawsuit and the federal settlement relate to conduct from several years ago, it remains to be seen if Vigodman's efforts will bear fruit. 

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Filed Under: Regulatory / Compliance
Top image credit: Raysonho