Published On: Wed, May 15th, 2019

Dinners, ‘Girls’ Evenings’, Meetings on the golf courts: The lawsuit that tells Us about Teva

Teva is currently diving 8.5% on high turnover in Tel Aviv Stock Exchange. Teva is completing a continuous plunge of more than 80% from the peak of 2015.

Girls’ parties, exclusive dinners, meetings on the golf courts, exchange phone calls and thousands of emails used by the largest generic drug makers to divide market shares and to coordinate prices,

according to the lawsuit filed last Friday in the Connecticut court.

Forty-four states in the United States filed the suit against 18 generic pharmaceutical manufacturers. Israeli company, Teva, at the center of what became “the enemies of the people.”

According to the allegations, Teva significantly raised the price of 112 generic drugs and coordinated with more than a dozen companies, the cost of at least 86 medications with its competitors. In some cases, prices increased by more than 1,000%.

Leading generic manufacturers, including Mylan and Pfizer,
Dr. Rady’s, Sandoz, Taro Israel, and Actavis, which was acquired by Teva in 2016.

After a five-year investigation, a quote from “The Wealth of Nations” (1776), by the well-known Scottish economist Adam Smith, opens the lengthy detailed lawsuit:
“People from the same professional branch rarely meet, even for entertainment, but the conversation always ends with a conspiracy against the public, or in certain cases with raising prices.”

The lawsuit immediately goes to illustrate the truth of Smith’s insight. Under the title “The warm and pleasant nature of the industry,” the suit notes that the structure of the generic industry facilitates direct communication and interaction between competing manufacturers.

For example, many of the leading generic companies are present at industry conferences over the years, such as that of the Pharmacy Chain Association or the Association of Generic Companies. The salespeople of these companies meet with each other and discuss the businesses and customers of each of them.
These conferences and meetings include social and entertainment events such as golf games, cocktail parties, and dinners. The defendants used these meetings to discuss and share sensitive competitive information about upcoming tenders and pricing policies.

The salespeople who were supposed to be bitter competitors were not satisfied with industry conferences and organized more intimate encounters by exploiting the physical proximity of the staffs of the companies in which they employed (the lawsuit claims that 41 generic companies located between New York and Philadelphia).

Teva at the center of a conspiracy to raise drugs prices: “Deception against the American people”

In January 2014, when the prices of some generic drugs rose sharply, 13 senior executives at generic companies including CEOs mate at a steakhouse in Bridgewater, New Jersey.

The practice among the companies was that at every dinner of the generic companies, one company was responsible for paying the bill.

In one of the meetings, one of the executives recorded as complaining: “It’s amazing how many people like whiskey when they do not pay for it.” Another variety of encounters were “girls’ evenings” in which they met regularly and shared sensitive business information.

The senior executives developed a jargon to hide their criminal acts, quite ostensibly, like gangs. When a generic drug maker participated in the plot, and the prices remained high, she was said to be “playing well in the sandbox.”

The following case described in the statement of claim illustrates this. One of the Pharm chains turned to Teva in the name of Greenstone, the generic arm of Pfizer. A representative of the pharm chain hinted at the nature of Greenstone’s intention to start marketing the drug Cabergoline and that it was interested in acquiring several customers.
The representative of the Pharm chain specifically asked for a coin to give up a big customer for Greenstone and said that “Greenstone promised to play nicely in the sandbox.” A representative of Teva responded after an internal discussion was held: “Tell Greenstone that we are playing well in the sandbox and we will give them the requested customer.”

The balance of terror among competitors

Another term used by the members of the cartel was “fair share.” It means that a member of the cartel will not submit a competing and lower bid after one of the manufacturers has raised the price of the drug – as long as each of the cartel participants has allocated a fair share of the profit pie.

The allocation of a “fair share” to each member of the cartel based on the number of companies producing a particular drug, and the timing at which each of them started marketing the drug. The manufacturers agreed to avoid competing for the price and at certain times to raise the cost of the drug.

The mechanism of allocating a fair share to each of the competitors was particularly effective when a new manufacturer entered the market.

In a competitive generic drug market, the entry was supposed to lower the price of the drug – but in the distorted market created by the cartel, the veteran manufacturers turned to the new manufacturer and agreed to give up the customer or customers.

They promised not to submit a competing offer to the same customer. Sometimes, they will give the customer a fictitious offer at a deliberately high price so that the new manufacturer who enters the market will win the customer he wants.

The lawsuit describes the balance of terror that prevailed among the competitors.

For example, Taro refused in August 2015 to submit a competing bid for the marketing of Etodolac for the treatment of pain and inflammation of an extensive pharmacy network, which rival company Zydus was its leading supplier.

The reason for the refusal was the fear that Zydus would interact and compete in marketing a relevant Taro product, Warfarin, designed to prevent blood clotting.

The lawsuit details how Taro agreed with Teva and Zydus in 2014 to coordinate the price of Warfarin and to divide the customers among them. They concerned that a competitive bid for Etodolac’s marketing would upset the delicate balance achieved in the critical Warfarin market.

The lawsuit states that in 2013, Teva’s sales and pricing officers conducted phone calls or SMS messages with every major competitor in the industry. According to the table attached to the claim, Teva representatives held no less than 1,389 phone calls or text messages with seven prominent generic companies, the most prominent being the Indian company Zydus, which received no fewer than 531 calls.

According to the lawsuit, one of the active figures in the price coordination mechanism was Nisha Patel, who was hired by Teva in 2013 as vice president of sales and marketing for strategic customers.

Patel did not waste time, and shortly after her appointment, she turned to a senior executive at Sandoz, the generic arm of Swiss pharmaceutical giant Novartis. In the meantime, the same senior official has become one of the country’s most prominent witnesses.

SMS’s with every essential competitor in the industry

The lawsuit states that in 2013, Teva’s sales and pricing officers conducted phone calls or SMS messages with every major competitor in the industry. According to the table attached to the claim, Teva representatives held no less than 1,389 phone calls or text messages with seven prominent generic companies, the most prominent being the Indian company Zydus, which received no fewer than 531 calls.

According to the lawsuit, one of the active figures in the price coordination mechanism was Nisha Patel, who was hired by Teva in 2013 as vice president of sales and marketing for strategic customers.

Shortly after her appointment, Patel turned to a senior executive at Sandoz, the generic arm of Swiss pharmaceutical giant Novartis. In the meantime, the same senior official has become one of the country’s most prominent witnesses.

Patel asked him how Sandoz was managing the price hikes. Patel explained that she was hired by Teva to identify products in which Teva could raise prices. Sandoz’s chief executive told Patel that Sandoz would follow Teva in raising prices and would not try to take its customers. The official repeated the contents of the conversation to Armando Klum, who was then vice president of contracts and business analysis at Sandoz, and Klum confirmed the answer.

According to the lawsuit, generics manufacturers have also adjusted prices for a large number of generic drugs at the same time.

For example, in July 2013 Teva raised the price of 21 drugs. The move created a lot of pressure on Sandoz’s management, which demanded a list of the drugs Teva raised. Following the pressure, another senior at Sandoz, who is also a state witness, turned to David Rekenthaler, who was vice president of sales in Teva and was a colleague in the past.

The former Sandoz official asked Rekenthaler to get the full list of drugs Teva had raised their prices. David Rekenthaler sent the list to his private email and from there to Sandoz’s private email. The list included drugs that Sandoz had not even produced.

According to the lawsuit, the generic companies made decisions to stop marketing drugs or enter new markets based on the identity of the competitors and the nature of the informal relations that existed between them. Sandoz, for example, decided to temporarily quit marketing 10 generic drugs marketed by Taro. This allowed Taro to raise the price of these 10 drugs when Sandoz abandoned the market – and sometime after drug prices were raised, Sandoz returned to market them, this time at a higher price.

Greedy

The lawsuit states that the policy of price adjustment has risen from 2012 to 2015. Pharmaceutical manufacturers no longer settled for stabilizing prices and maintaining a fair share of each of them and switched to a coordinated policy of raising wild prices.

As of July 31, 2012, Teva raised the prices of several drugs, some of which Teva marketed exclusively and in others competed with other manufacturers. Prior to raising drug prices, Teva coordinated them with its competitors.

Kevin Green, former Director of National Accounts at Teva between 2006 and 2013, or David Rekenthaler, directly or indirectly contacted the competitors Kevin Green called James Nesta, vice president of sales at Mylan, on July 26-23, while Rekenthaler called a senior salesperson at Watson (which was eventually acquired by Teva) twice on July 11.

The lawsuit lists specific examples of drugs whose prices have been raised by hundreds and thousands of percent. The drug Nadolol, which is sold under the brand name Corrigard to lower high blood pressure, was in Teva’s sights.

At the beginning of 2012, Teva discussed with Mylan and Sandoz, which were its only competitors on this drug. Nadolol was sold in large quantities and one of the most profitable drugs for the three companies, and therefore it was essential for them to maintain a mechanism of coordination between them.

Teva was the first to raise the price of the drug on July 31, 2012, not before Kevin Green spoke with the state witness from Sandoz and James Nesta from Mylan. Sandoz followed Teva and raised the price of the drug Nadolol by 746% to 2,762% according to the dosage.

The day before the rise, Armando Kellum, then vice president of pricing at Sandoz, called Kevin Green who also acted as an intermediary between Sandoz and Mylan – and passed on to Sandoz’s James Nesta a message about raising the price of the drug Nadolol.

The price hikes were increasing, each time at the initiative of another company, in coordination with the other two companies. The prosecution notes that following the wild price increases of the drug Nadolol, the Connecticut State Attorney’s Office received a complaint from a person who had been treated with this drug for 15 years. The complainant wrote that in 2004 he paid $10 to $20 from his own pocket as a deductible in purchasing a drug inventory for three months. Today the same patient pays no less than $500 for the same amount.

Teva denies any connection to illegal activities “Teva is committed to complying with all laws and regulations and will defend itself with determination,” the no-longer pharmaceutical giant response.

Teva is currently diving 8.5% on high turnover in Tel Aviv Stock Exchange. The pharmaceutical company’s share has been down 20% since the beginning of the week following the suit filed against it in the US, and the fear that it will plunge into financial turmoil. By now, Teva is completing a continuous plunge of more than 80% from the peak of 2015.

Those Drugs listed  as subject to price-fixing and market allocation agreements:

  1. Adapalene Gel
  2. Amiloride HCL/HCTZ Tablets
  3. Amoxicillin/Clavulanate Chewable Tablets
  4. Amphetamine/Dextroamphetamine ER (aka Mixed Amphetamine Salts)
  5. Amphetamine/Dextroamphetamine IR
  6. Azithromycin Oral Suspension
  7. Azithromycin Suspension
  8. Baclofen Tablets
  9. Benazepril HCTZ
  10. Bethanechol Chloride Tablets
  11. Budesonide DR Capsules
  12. Budesonide Inhalation
  13. Bumetanide Tablets
  14. Buspirone Hydrochloride Tablets
  15. Cabergoline
  16. Capecitabine
  17. Carbamazepine Chewable Tablets
  18. Carbamazepine Tablets
  19. Cefdinir Capsules
  20. Cefdinir Oral Suspension
  21. Cefprozil Tablets
  22. Celecoxib
  23. Cephalexin Suspension
  24. Cimetidine Tablets
  25. Ciprofloxacin Tablets
  26. Clarithromycin ER Tablets
  27. Clemastine Fumarate Tablets
  28. Clomipramine HCL
  29. Clonidine TTS Patch
  30. Clotrimazole Topical Solution
  31. Cyproheptadine HCL Tablets
  32. Desmopressin Acetate Tablets
  33. Desogestrel/Ethinyl Estradiol Tablets (Kariva)
  34. Dexmethylphenidate
  35. Dextroamphetamine Sulfate ER
  36. Diclofenac Potassium Tablets
  37. Dicloxacillin Sodium Capsules
  38. Diflunisal Tablets
  39. Diltiazem HCL Tablets
  40. Disopyramide Phosphate Capsules
  41. Doxazosin Mesylate Tablets
  42. Drospirenone and ethinyl estradiol (Ocella)
  43. Enalapril Maleate Tablets
  44. Entecavir
  45. Epitol Tablets
  46. Estazolam Tablets
  47. Estradiol Tablets
  48. Ethinyl estradiol and levonorgestrel (Portia and Jolessa)
  49. Ethosuximide Capsules
  50. Ethosuximide Oral Solution
  51. Etodolac ER Tablets
  52. Etodolac Tablets
  53. Fenofibrate
  54. Fluconazole Tablets
  55. Fluocinonide Cream
  56. Fluocinonide Emolient Cream
  57. Fluocinonide Gel
  58. Fluocinonide Ointment
  59. Fluoxetine HCL Tablets
  60. Flurbiprofen Tablets
  61. Flutamide Capsules
  62. Fluvastatin Sodium Capsules
  63. Gabapentin Tablets
  64. Glimepiride Tablets
  65. Griseofulvin Suspension
  66. Haloperidol
  67. Hydroxyurea Capsules
  68. Hydroxyzine Pamoate Capsules
  69. Irbesartan
  70. Isoniazid
  71. Ketoconazole Cream
  72. Ketoconazole Tablets
  73. Ketoprofen Capsules
  74. Ketorolac Tromethamine Tablets
  75. Labetalol HCL Tablets
  76. Lamivudine/Zidovudine (generic Combivir)
  77. Levothyroxine
  78. Loperamide HCL Capsules
  79. Medroxyprogesterone Tablets
  80. Methotrexate Tablets
  81. Mimvey (Estradiol/Noreth) Tablets
  82. Moexipril HCL Tablets
  83. Moexipril HCL/HCTZ Tablets
  84. Nabumetone Tablets
  85. Nadolol Tablets
  86. Niacin ER Tablets
  87. Nitrofurantoin MAC Capsules
  88. Norethindrone/ethinyl estradiol (Balziva)
  89. Northindrone Acetate
  90. Nortriptylline Hydrochloride Capsules
  91. Omega-3-Acid Ethyl Esters
  92. Oxaprozin Tablets
  93. Oxybutynin Chloride Tablets
  94. Paricalcitol
  95. Penicillin VK Tablets
  96. Pentoxifylline Tablets
  97. Piroxicam
  98. Pravastatin Sodium Tablets
  99. Prazosin HCL Capsules
  100. Prochlorperazine Tablets
  101. Propranolol HCL Tablets
  102. Raloxifine HCL Tablets
  103. Ranitidine HCL Tablets
  104. Tamoxifen Citrate Tablets
  105. Temozolomide
  106. Tizanidine
  107. Tobramycin
  108. Tolmetin Sodium Capsules
  109. Tolterodine ER
  110. Tolterodine Tartrate
  111. Topiramate Sprinkle Capsules
  112. Trifluoperazine HCL
  113. Valsartan HCTZ
  114. Warfarin Sodium Tablets

Wordpress site Developed by Fixing WordPress Problems