States Put Teva at Center of Drug Price-Fixing Case

Company Responses

"The allegations in this new complaint and in the litigation more generally, are just that — allegations," Kelley Dougherty, a Teva vice president, said in a statement.

Pfizer said in a statement it has cooperated with the Connecticut attorney general since being contacted more than a year ago and "we do not believe the company or our colleagues participated in unlawful conduct and deny any wrongdoing." Greenstone, the company's generics unit, "has been a reliable and trusted supplier of affordable generic medicines for decades and intends to vigorously defend against these claims," Pfizer said.

Representatives for the other companies didn't respond to requests for comment after regular business hours on Friday evening. Cavanaugh, Nesta and Rekenthaler didn't immediately respond to messages sent through LinkedIn.

The complaint puts Teva at the center of the conspiracy, saying it colluded with a core group of competitors to follow each other's price increases. During a 19-month period from 2013 to 2015, Teva significantly raised prices on about 112 generic drugs and colluded with its competitors on at least 86 medicines, the states said. While the size of the increases varied, some were more than 1,000%.

"Teva is a consistent participant in the conspiracies identified in this complaint, but the conduct is pervasive and industry-wide," according to the complaint, which was filed in federal court in Connecticut. "Through its senior-most executives and account managers, Teva participated in a wide-ranging series of restraints with more than a dozen generic drug manufacturers, all of whom knowingly and willingly participated."

Shares Sink

The states are seeking unspecified damages and penalties from the companies. Potential fines could exceed $2 billion, given that generic drug firms were churning out higher profits during the time in question, said Steven Tepper, an analyst at Israel Brokerage & Investments. That strikes a blow to a company already struggling to pay back $29 billion of debt — a sum almost twice its market value.

Teva shares sank almost 11% Sunday to 46.66 shekels.

"To take this in proportion, that's about a year's worth of free cash flow that will have to be thrown out instead of used to reduce the debt," Tepper said. "The companies will most likely drag this lawsuit out for a number of years and Teva could be in much better shape then than it is in today. But a major fine is still not a nice situation."

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