Teva shares tumbled by over 4 percent on Monday morning after the Washington Post named the company as one of at least 16 generic drug manufacturers facing investigation into alleged price-fixing in the United States.
“This is most likely the largest cartel in the history of the United States,” Joseph Nielsen, an assistant attorney general and antitrust investigator involved in the probe, told the US newspaper.
Some 47 US states are now plaintiffs in a case which prosecutors say show the industry was “riddled” with artificially raised prices for at least 300 drugs.
Executives from the drug companies, which included Mylan and Dr. Reddy’s alng with Teva, were said to have developed a lingo to communicate between themselves about how they would divide the market, dubbed “the sandbox,” in what amounted to an “illegal price-fixing schemes of massive proportion,” according to the newspaper.
“Trashing the market” was used when a company marketed drugs for lower prices than those agreed upon, and “fair share” was to ensure that all competitors made comfortable profits.
The report revealed that executives from rival companies were on such good terms with each other that they had an alphabetical rotation for who paid for each of their regular dinners, according to a source familiar with the probe who spoke anonymously.
The generic drug market was specifically created to save patient and taxpayer money through aggressive market competition.
Generic drugs were said to account for 90% of prescriptions in the US, but only 23% of the costs, according to the Association for Accessible Medicines, and have been said to lower medication costs. However any raised prices for medication that came about due to price-fixing leading would be borne by patients.
The anti-competitive agreements were said to have driven up prices on most if not all medications sold by the companies, according to the investigation, with officials saying they saw price increases of up to 2,000%.
Investigators say they have a huge amount of documentation, much of it unavailable to the public, and they expect further defendants to be added to the lawsuit in the future. It is believed this could pressure the drug companies to consider settling the case.
Last month, a federal judge ruled that over 1 million emails, cellphone texts and other documents could be shared with plaintiffs in an anti-trust lawsuit which has since turned into the investigation into massive alleged price-fixing.
The newspaper does not name an example of a specific drug manufactured by Teva that had an inflated cost due to the alleged scheme, but according to Globes, the company came under fire earlier this year when its “low-cost” generic version of the drug Syprine to treat the rare condition Wilson’s disease, cost $18,275 for 100 pills, compared to the brand named-drug’s cost of $21,267 for 100 pills.
Teva did not respond to the Washington Post’s request for comment, but in a court filing said that accusations of a price-fixing conspiracy “are entirely conclusory and devoid of any facts.”