Generic-Drug Giants Accused of Blocking Congressional Probe

Aug. 14, 2019
The most recent lawsuit included emails from 2014 in which executives at Teva, Mylan and Heritage planned to respond to congressional inquiries with “polite f-u” letters.

Senator Bernie Sanders and Representative Elijah Cummings are opening an investigation into generic-drug giants Mylan NV and Teva Pharmaceutical Industries Ltd. on allegations of “apparent coordinated obstruction” in failing to provide lawmakers with details about their pricing practices.

Sanders, an independent from Vermont who is running for the Democratic nomination for president, and Cummings, a Democrat from Maryland, sent letters to Teva and Mylan as well as closely held Heritage Pharmaceuticals Inc. The letters renewed a 2014 request for the companies to provide documents related to charges of generic-drug price-fixing.

The two companies have been at the center of state and federal probes into allegations that generic-drug companies coordinated with one another on setting prices for a range of widely used medications.

Lawsuits filed by state attorneys general in 2016 and this year allege a conspiracy among 20 drugmakers to carve up the market and raise prices of more than 100 drugs including commonly prescribed antibiotics as well as medications for reducing cholesterol and controlling seizures. Those actions, authorities allege, cost taxpayers and patients billions of dollars. The prices of some drugs increased by as much as 8,281% between October 2013 and April 2014, according to the lawmakers’ letter made public on Wednesday.

The most recent lawsuit included emails from 2014 in which executives at Teva, Mylan and Heritage planned to respond to congressional inquiries with “polite f-u” letters.

“Not only did your company’s apparent obstruction undermine our investigation, but it may have caused further harm to patients and health care providers by delaying the discovery of evidence about the companies’ price-fixing,” Sanders and Cummings wrote to the companies on Tuesday. They said withholding or concealing information in a congressional investigation is a violation of federal law.

Teva spokeswoman Kelley Dougherty said the company will “continues to cooperate fully with all investigations.”

Mylan, which recently announced plans to combine its business with Pfizer Inc.’s unit of older blockbuster medicines, said in a statement that it did not obstruct the 2014 congressional inquiry, and “will continue to cooperate” with investigations.

“Mylan respects Congress’s long-standing interest in drug pricing and has worked and will continue to work constructively with Congress to provide it with information relevant to its inquiries,” the company said in a statement.

A representative for Pfizer declined to comment. The companies have said they expect their deal to close in mid-2020.

A representative for Heritage couldn’t immediately be reached for comment.

Mylan fell as much as 8.7% in New York on Wednesday amid a broader stock-market sell-off. Teva’s U.S.-traded stock fell as much as 8.6%; the shares hit their lowest price since 1999 last week when the company set aside $646 million for legal expenses related to its role in the opioid crisis.

Probes Hit Roadblocks

The renewed investigation into the drugmakers comes as a federal probe into the generics industry has hit significant obstacles. Over the course of a multiyear Justice Department investigation, only two executives from Heritage Pharmaceuticals have been charged. Both pleaded guilty more than two years ago.

The Justice Department will likely bring additional charges soon, Bloomberg reported in July, citing two people familiar with the investigation, though it’s not clear who might be charged. Both people said the probe has encountered challenges, but they said it’s no different from any other complex case. On at least some of the conduct that has come to light, the five-year criminal statute of limitations is set to expire next year.

By Cristin Flanagan and Riley Griffin

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Licensed content from Bloomberg, copyright 2016.

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