Contradicting Teva, Mexico regulator finds Rimsa drug products safe

Mexico’s pharmaceutical regulator has issued a memorandum that appears to undermine the claims of Teva Pharmaceutical Industries Ltd. against drugmaker Representaciones e Investigaciones Medicas SA, known as Rimsa, which it acquired for $2.3 billion in 2015.

Mexico’s Federal Commission for the Protection against Sanitary Risk (COFEPRIS), an autonomous organ of the Department of Health, issued a memorandum dated March 13 saying that for 147 drugs produced by Rimsa, it found no “unexpected adverse effects” and concluded that the drugs were safe.

The memorandum, a copy of which was made available to The Times of Israel, also said that 16 checks made by COFEPRIS on Rimsa since 2009 revealed no other issues that could pose additional health risks. Relevant documentation presented by the company was also found to be “truthful and correct” by Cofepris.

Jerusalem-based Teva, which is engaged in a legal battle against Rimsa for allegedly selling defective products and duping regulators, declined to comment on the COFEPRIS findings, because the litigation is ongoing.

In September 2016, the former owners of Rimsa, Fernando Espinosa Abdala and Leopoldo de Jesus Espinosa Abdala, filed suit in a New York State court against Teva’s subsidiary Lemery S.A, saying Teva was suffering from “a classic case of buyers’ remorse” and was therefore alleging that the Espinosa brothers fraudulently induced it to purchase the Rimsa companies. Teva was looking to get “what is in effect a retroactive discount” on the deal, the court document says.

In its counter-suit against the Espinosa brothers, also filed in September, Teva, the world’s largest maker of generic drugs, alleged that Rimsa, with the knowledge of the Espinosas, was engaged in a years-long scheme to sell defective and unlawful products and to conceal those violations from Mexican regulators.

Rimsa asserted in its suit that Teva’s allegations were baseless and that “to the extent that there are any differences in the manufacturing processes, they did not have any impact on the safety or effectiveness of the products.”

The March 13 COFEPRIS document was very much a “vindication” of Rimsa, a person familiar with the matter told The Times of Israel, and Rimsa will likely be submitting the document to the New York State court’s attention.

“It should be a game-changer,” the source said, as Teva claims Rimsa lied both to the company and to the regulator.

COFEPRIS found no problem with the drugs’ registrations, saying that authorization for all 147 drugs was present in the archives of Mexico’s Sanitary Authorization Commission, according to the document.

“Teva is working in full cooperation with the Mexican authorities,” Teva said in an emailed comment to The Times of Israel. Regarding Rimsa, “The remediation plan is still ongoing. We do not comment on ongoing litigation.”

Teva, a global manufacturer of generic and specialty drugs, in 2015 bought Rimsa, one of the largest independent Mexican pharmaceutical companies, and its intellectual property, via two of its subsidiaries, in an effort to expand into the growing Mexican market.

In September the next year, the Espinosa brothers filed their lawsuit against Teva, and Teva followed with its own suit later that month.

Teva’s $2.3 billion headache

In its lawsuit, Teva said the Espinosas “affirmatively lied and concealed extraordinary legal violations” to attain the $2.3 billion price. Teva “has suffered substantial losses as a result. The legal violations prevent the manufacturer from selling its products, seriously undermining the value of the assets” that Teva acquired in the transaction.

“Unbeknownst to Teva, Rimsa was engaged in a years-long scheme to sell defective and unlawful products and to conceal those violations from Mexican regulators,” Teva said in its suit.

One week after the transaction closed, Teva received an anonymous email alerting it to Rimsa’s false product registrations, double paperwork, and fraud, Teva’s suit alleged.

Teva said in its suit that the investigation that followed revealed Rimsa was selling countless products in violation of the law, either because they did not match their registered formulations, they had ingredients from unapproved suppliers, they were not supported by the necessary tests, “or some combination of the foregoing.”

The investigation led to Teva holding a dialogue with COFEPRIS about the problems, and COFEPRIS conducted a three-day inspection of Rimsa’s plant. As a result of that inspection, COFEPRIS ordered Teva to halt production of 44 products. Teva complied with that order and also halted its commercial manufacture and sale of numerous other products as well. Ultimately, COFEPRIS shut down the plant entirely, Teva’s suit said.

In February, Teva said its Chief Executive Officer Erez Vigodman would step down, three years after he took his post in an effort to turn around the fortunes of the drugmaker.

(With assistance from Melanie Lidman)