United States of America v. Teva Pharmaceuticals USA, Inc. and Teva Neuroscience, Inc
Case Background
On August 18, 2020, the United States filed a fraud lawsuit against Teva Pharmaceuticals USA, Inc., and Teva Neuroscience, Inc., the nation’s largest generic drug manufacturer. The United States accused Teva Pharmaceuticals of fraud, alleging it violated the Anti-Kickback Statute and False Claims Act by paying over $300 million to charities to cover Medicare co-pays for its drug, Copaxone, between 2006 and 2015. The government claimed this scheme generated false Medicare claims worth hundreds of millions of dollars while hiding the drug’s steep price increases.
Cause
The case accused Teva of violating the anti-kickback law between 2006 and 2015. According to the complaint, Teva paid over $300 million to two charities, the Chronic Disease Fund (CDF) and The Assistance Fund (TAF), to cover Medicare co-pays for its multiple sclerosis drug, Copaxone.
The government claimed these payments generated false Medicare claims worth hundreds of millions of dollars while boosting Teva’s revenue. Teva allegedly used CDF and TAF to funnel funds, intending the charities to pay co-pays for Copaxone patients. This strategy, according to prosecutors, aimed to shield patients from the drug’s high cost, which soared from $17,000 to over $73,000 per year—a price increase exceeding inflation by 19 times.
The complaint asserted that Teva’s goal was to ensure patients, including those on Medicare, could afford Copaxone without feeling the burden of its steep prices. By doing so, Teva allegedly induced patients to buy the drug while profiting from Medicare reimbursements. Through these actions, the government argued, Teva prioritized revenue over compliance with federal law.
Damages
The United States sought treble damages, civil penalties, and a full accounting of profits earned from the alleged misconduct. The claims aimed to recover funds and impose penalties for the violations.
Key Arguments and Proceedings
Legal Representation
- Plaintiff(s): United States of America
- Counsel for Plaintiff(s): Abraham R. George | Diane Seol | Douglas J Rosenthal | Evan D. Panich | Nelson Wagner
- Defendant(s): Teva Pharmaceuticals USA, Inc. | Teva Neuroscience, Inc.
- Counsel for Defendant(s): Alison Tanchyk | Devin Kenna Troy | Emily E. Renshaw | Eric W. Sitarchuk | Harvey Bartle, IV | Justin Stern | Matthew D. Klayman | Rebecca J Hillyer | Theodore Eric Dayno | William T McEnroe | William R. Peterson
Claims
The United States filed several claims against Teva Pharmaceuticals, alleging violations of the False Claims Act and other federal laws.
Count I: Presentation of False Claims
The government accused Teva of knowingly submitting or causing false Medicare claims linked to illegal kickbacks. Teva allegedly funneled over $300 million to charities to cover Medicare co-pays for Copaxone. These claims, tainted by kickbacks, led to substantial financial damages to the United States.
Count II: False Records Supporting False Claims
Teva allegedly created and used false records and statements to support fraudulent Medicare claims. These included false certifications of compliance with anti-kickback laws and deceptive reporting. These actions facilitated the approval and payment of claims tied to Copaxone, resulting in significant losses for the government.
Count III: Conspiracy to Violate the False Claims Act
The complaint asserted that Teva conspired with charities, such as CDF and TAF, and other entities to submit fraudulent claims. This conspiracy aimed to use illegal kickbacks to ensure Medicare payments for Copaxone, further amplifying the financial harm caused to the government.
Count IV: Unjust Enrichment
The government argued that Teva unjustly profited from its actions, earning substantial revenues by violating federal laws. Teva allegedly benefited from payments made by Medicare patients who received co-pay assistance funded through illegal kickbacks.
Defense
On October 15, 2021, Teva responded to the United States’ lawsuit by denying the central allegations against it. The company rejected claims that its donations to patient assistance programs violated the Anti-Kickback Statute or led to false claims under the False Claims Act.
Teva argued that its actions complied with relevant laws and regulations. It maintained that it did not act with the necessary intent to violate the law and that its conduct did not significantly impact any false claims. Additionally, Teva claimed the government knew about and approved the patient assistance programs in question.
In its defense, Teva also raised constitutional challenges, further asserting that its practices were lawful and appropriate. Through these arguments, Teva sought to counter the accusations and defend its charitable contributions.
Settlement
In October 2024, Teva Pharmaceuticals settled allegations without admitting wrongdoing before Judge Nathaniel M. Gorton. The company agreed to a $450 million civil settlement, adding to a $225 million criminal penalty related to price-fixing.
As part of the settlement, Teva agreed to pay $425 million by 2029 to address claims involving Copaxone co-pay assistance. It also agreed to pay $25 million to resolve allegations related to price-fixing of clotrimazole and tobramycin. This settlement resolved the 2020 lawsuit over Teva’s multiple sclerosis drug, Copaxone, as well as a separate investigation into its role in a broader price-fixing scheme.
The investigation revealed Teva’s alleged involvement in fixing prices for pravastatin, a cholesterol-lowering drug, along with two antibiotics, clotrimazole and tobramycin. Previously, Teva entered a deferred prosecution agreement and paid a $225 million criminal fine. This comprehensive resolution addressed both civil and criminal claims against the company.
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