Back to top

Image: Bigstock

TEVA to Pay $225 Million to Settle Price-Fixing Charges (Revised)

Read MoreHide Full Article

Teva Pharmaceutical Industries Ltd. (TEVA - Free Report) has settled its criminal price-fixing charges with the Department of Justice (DOJ) in the United States by signing a deferred prosecution agreement (DPA).

In 2020, the DOJ charged Teva for conspiring to fix prices, rig bids and allocate customers for generic drugs in the United States. An indictment was filed in the U.S. District Court for the Eastern District of Pennsylvania, which stated that Teva was involved in three conspiracies with other drugmakers from May 2013 to December 2015, which led to substantially higher prices for generic drugs, depriving Americans of affordable access to prescription drugs

Under the DPA, Teva has agreed to pay a fine of $225 million over five years. Out of this amount, $22.5 million will be due each year from 2024 through 2027, and $135 million will become due in 2028. Teva will also have to sell its pravastatin generics business, which was a key business involved in the company’s price-fixing conspiracy. Pravastatin is a commonly prescribed cholesterol medication. In addition, Teva has agreed to donate $50 million worth of two generic products, clotrimazole and tobramycin, to humanitarian organizations. The prices of these two drugs were also affected by Teva’s criminal schemes, said the DOJ.

So far this year, shares of Teva Pharmaceuticals have risen 5.3% compared with the industry’s increase of 32.1%.


Zacks Investment Research
Image Source: Zacks Investment Research

Teva blamed a former employee for participating in three antitrust conspiracies between 2013 and 2015 that involved three medicines, pravastatin, clotrimazole and tobramycin. The employee left the company in 2016.

The DOJ also signed a similar DPA with India’s Glenmark Pharmaceuticals. Glenmark will pay a $30 million criminal penalty. Both Teva and Glenmark will face prosecution if they violate the terms of the DPAs.

The DOJ Antitrust Division has long been investigating generic companies that indulged in widespread illegal conspiracy to reduce competition and artificially hike and manipulate the prices of generic prescription drugs.

With today’s agreements, all seven generic makers charged with such conspiracies have entered into settlements with DOJ or paid criminal penalties. All these companies have collectively agreed to pay more than $681 million in criminal penalties.

Zacks Rank & Stocks to Consider

Teva currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks generic drugmakers/biotech companies are Dr. Reddys Laboratories (RDY - Free Report) , Acasti Pharma (ACST - Free Report) and Bausch Health Companies (BHC - Free Report) . While Dr. Reddy’s sports a Zacks Rank #1 (Strong Buy), Acasti Pharma and Bausch Health have a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings per share estimates for Dr. Reddy’s Laboratories have increased from $3.40 to $3.74 for 2023 and from $3.79 to $4.06 for 2024 in the past 30 days. Shares of RDY have risen 38.6% so far this year. Earnings of Dr. Reddy’s Laboratories beat estimates in all the last four quarters, the average surprise being 39.63%.

Loss per share estimates for Acasti Pharma have remained stable at $1.97 for 2023 and $1.70 for 2024 in the past 30 days. Shares of ACST have declined 27.2% year to date. Earnings of Acasti Pharma beat estimates in the past three quarters, the average surprise being 46.11%.

Earnings per share estimates for Bausch Health have increased from $3.26 to $3.32 for 2023 and from $3.66 to $3.70 for 2024 in the past 30 days. Shares of BHC have surged 34.5% year to date. Earnings of Bausch Health beat estimates in two of the last four quarters but missed in the other two, the average negative surprise being 7.30%.

(We are reissuing this article to correct a mistake. The original article, issued on August 22, 2023, should no longer be relied upon.)

Published in