Teva ‘s $520M bribery settlement with the feds sparks shareholder lawsuit

Justice statue with sword and scales
Teva is starting the new year facing a shareholder lawsuit after it last month paid $520 million to resolve bribery charges in Russia, Ukraine and Mexico.

Just after forking over $520 million to resolve federal bribery charges relating to its operations in Russia, Ukraine and Mexico, Teva is starting the new year facing a shareholder lawsuit.

Ra’bcca Technologies has filed a petition for approval for a derivative suit against Teva and several of its current and former officers, including ex-board members Chaim Hurvitz, Shlomo Yanai, Dan Suesskind, and former chairman Phillip Frost, Israel’s Globes news service reports.

Last month, Teva agreed to pay nearly $520 million to the U.S. Department of Justice and Securities and Exchange Commission to resolve violations of the Foreign Corrupt Practices Act. The criminal fine to the DOJ totaled more than $283 million, while Teva ponied up $236 million to the SEC.

“The respondents, past and present officeholders in Teva, bear responsibility for Teva’s act and failure in violating U.S. law, and should therefore compensate Teva for all the damages caused to it,” Ra’bcca representatives said, according to Globes.

In announcements detailing Teva’s admitted violations, U.S. authorities say company execs and employees in Russia bribed an official there to boost the government’s purchases of its multiple sclerosis med Copaxone.  The government official made $65 million between 2010 and 2012 setting up the purchases, even as Russia sought to cut costs on foreign drugs, prosecutors said.

Between 2001 and 2011 in Ukraine, Teva bribed a top official in order to “influence” the government’s decisions on Teva drug approvals, prosecutors said, providing the “registration consultant” with $200,000 monthly through a fee and other expenses.

And in Mexico, a Teva subsidiary’s employees bribed doctors to prescribe Copaxone since “at least 2005,” according to the U.S. government’s release. The company additionally admitted it didn’t have an adequate control system in place to catch the violations, and hired managers “who were unable or unwilling to enforce” existing policies, according to prosecutors.

Teva’s settlement—the largest fine paid by a pharma company over FCPA violations—comes after years of investigations into its practices. The company in November notified the Tel Aviv Stock Exchange that it had set aside $520 million to cover expected expenses for the violations. Early in 2015, after conducting its own investigation, the company said it had “likely” violated FCPA in a number of countries.

Along with paying the fines, Teva agreed to continue to work with the feds and to boost its internal compliance efforts. Prosecutors said the company received a 20% discount from the low end of sentencing guidelines due to its “substantial cooperation and remediation.”

The FCPA probe wasn’t Teva’s only legal entanglement, however. Among a number of generics makers, the company now faces a Justice Department probe into possible price collusion.

thanks to: FiercePharma

 

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