Teva allegedly withheld pertinent evidence prior to reaching opioid settlement.
Although Israeli drug manufacturer, Teva Pharmaceuticals, agreed to pay $23 billion to settle global claims that the company contributed to the opioid crisis, plaintiffs have discovered new evidence in the case that suggests it will face ongoing litigation. Cities and states suing the pharmaceutical company have asked a judge to sanction it for withholding what they deem is “key” evidence in an audit report.
In a recently filed motion in federal court in Cleveland, the plaintiffs contended they “were deprived of crucial evidence in negotiating settlements” with Teva in 2019. The plaintiffs cited Teva for “willful failure” to produce audit findings, which include details of suspicious orders, during the discovery phase. They claim the report includes larger-than-normal opioid shipments, which pharmaceutical companies are mandated to report to the Drug Enforcement Administration (DEA). Judge Dan Polster, appointed by former U.S. president Bill Clinton, is overseeing the consolidated litigation and will respond.
Meanwhile, S&P is lowering the generic manufacturer’s credit rating due to the fact that “Teva is facing rising risks from a variety of lawsuits, including potential for material liabilities in cases related to opioids, price-fixing and anti-kick laws. We also see potential for these developments to harm the company’s reputation, putting the company at a competitive disadvantage.” S&P’s credit analysts add, “We are raising our estimate of legal liabilities to about $2.5 billion to $3 billion following recent developments with plaintiffs. This creates further pressure on credit metrics which were already weak for the rating…Given already high debt leverage, we expect the substantial debt maturities and legal settlements over the next few years to absorb the company’s free cash flow and constrain its ability to invest in growth opportunities. We expect this will weaken the company’s competitive advantage.”
Under last year’s settlement deal, Teva agreed to donate its generic version of the opioid addiction treatment drug Suboxone and pay $250 million over the course of a decade. At the time, it did not produce the audit findings and reported, “The company is pleased to positively contribute to solving the nationwide opioid epidemic. Teva has consistently committed to complying with all laws and regulations regarding its manufacture and sale of opioids…The Teva product donation will significantly contribute to the care and treatment of people suffering from addiction and assist impacted communities.” Yet, the company continued to deny any wrongdoing.
Hunter Shkolnik, an attorney for the plaintiffs, responded hesitantly, “The deal is overvalued to make the settlement look better. I don’t believe a no-cash payment from Teva, one of the largest generic manufacturers in the world, is appropriate.”
The recent developments in the case certainly don’t mark the first time Teva has been scrutinized for underhanded dealings. Previously, in 2016, the Justice Department found, “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,” according to Assistant Attorney General Caldwell. The company agreed to resolve criminal charges and pay a penalty of more than $283 million for alleging bribing government officials in Russia, Ukraine and Mexico in violation of the Foreign Corrupt Practices Act (FCPA).
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Teva Pharmaceutical shares surge after announcing global opioid settlement
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