(CN) – Joining a long list of complainants against pharmaceutical giant Teva Pharmaceuticals and similar drug makers, Israel’s largest pension fund manager claims in a class action that Teva colluded with competitors to exorbitantly raise the price of generic drugs over the past five years.
Teva investor, Psagot Mutual Funds and Psagot Provident Funds & Pension Ltd., is suing the company and its senior officers in the U.S. District Court of Connecticut for the alleged “illegal marketing and distribution of opioid narcotics,” that saw the company rake in $2.3 billion in profits by increasing the price of certain generic drugs by almost 100 percent from February 6, 2014 to May 30, 2019.
The lawsuit attributes the devastating opioid crisis ravaging the United States in part to Teva’s participation in “one of the largest illegal cartels ever in the history of the United States, that wiped out billions in investor funds and could result in over $4 billion in damages and criminal liability.”
Teva officers, the complaint says, repeatedly made dishonest statements about the company’s explosive revenue growth while concealing its “price-hike strategy” where, in cahoots with competitors, Teva methodically raised the prices of generic drugs at least 76 times. Meanwhile, the company credited the growth to portfolio diversification and new products.
“In truth, Teva’s price-hike strategy was responsible for $155 million, or 31 percent, of the company’s year over-year growth, and, overall, generated approximately $848 million in inflated profits for 2015,” the lawsuit states, adding that the price hike contributed as much as $236 million in inflated profits for the second quarter of 2017.
Teva’s underlying rationale was the $40.5 billion acquisition of Actavis in 2015 that coincided with the growing opioid crisis, eventually culminating in a Department of Justice investigation in June 2016.
Teva had no choice but to quit the price-hike scheme when the public became aware of the investigations. “The end of the price-hike strategy brought further declines in profits,” the lawsuit says, and the firing of several executives including CEO Erez Vigodman.
Teva stock reached a 19-year low in May of this year, closing at $8.84 on May 30.
Psagot is represented by Erin Green Comite and Margaret B. Ferron of Scott+Scott Attorneys At Law in Colchester, Conn.