Teva, Glenmark enter deferred prosecution deal with DOJ over price-fixing

Drugmaker Teva Pharmaceuticals agreed to pay $225 million in criminal fines over five years and divest its version of a generic cholesterol drug to resolve charges related to price-fixing on that medication and other widely used treatments, the Department of Justice announced Monday. 

Teva, in a press release Monday, said it will pay $22.5 million each year from 2024 through 2027, and $135 million in 2028. 

Glenmark Pharmaceuticals will pay $30 million to resolve similar charges. The cases are related to pravastatin, a prescription drug that reduces cholesterol and helps to prevent heart attacks and strokes. 

It’s the latest resolution in a string of cases related to price-fixing, which refers to competitors banding together to artificially set the price of a product. 

Since 2020, the DOJ’s antitrust division has charged five other pharmaceutical companies for participating in similar schemes affecting several generic drugs. Monday’s agreement means seven companies have resolved their criminal charges and collectively agreed to pay more than $681 million in criminal penalties. 

“Today, the Antitrust Division and our law enforcement partners hold two more pharmaceutical companies accountable for raising prices of essential medicines and depriving Americans of affordable access to prescription drugs,” Jonathan Kanter, assistant attorney general of the DOJ’s antitrust division, said in a release. 

The deals are deferred prosecution agreements, which means the two companies will not face trial or criminal punishment in the case if they abide by the terms of the agreements. If Teva and Glenmark are convicted, they will likely face mandatory debarment from federal health-care programs, according to the DOJ. 

Teva has also agreed to donate $50 million worth of two generic drugs affected by price-fixing to humanitarian organizations that provide medications to Americans in need. The company said during an earnings call earlier this month said it has set aside $200 million to resolve the DOJ’s price-fixing allegations. 

“Teva has robust and consistent compliance controls in place designed to prevent this type of activity from reoccurring, and has committed, as part of the [deferred prosecution agreement], to maintain those controls going forward,” the company said in its release, adding it is “pleased to put these charges behind us.”

Glenmark did not immediately respond to CNBC’s request for comment.

As part of Monday’s agreements, Glenmark admitted to participating in a scheme to fix the price of pravastatin. Meanwhile, Teva admitted to participating in three price-fixing schemes that affected pravastatin and two other drugs: skin infection treatment clotrimazole and tobramycin, a medication commonly prescribed to treat eye infections. 

The DOJ in June 2020 charged Glenmark with one count of price-fixing in a filing in the Eastern District of Pennsylvania. That complaint alleged that Glenmark and other companies raked in $200 million from the illegal scheme.

In August, a grand jury in the Eastern District of Pennsylvania returned a superseding indictment against Glenmark and Teva for the same conduct and similar actions. 

One count alleged that Teva conspired with Glenmark, another company called Apotex Corp. and others to increase prices of pravastatin and other generic drugs. Apotex admitted to its role in the scheme and agreed to pay a $24.1 million penalty in May 2020.