In an annual report filed with the Securities and Exchange Commission, Teva Pharmaceutical Industries announced that the Department of Justice subpoenaed information relating to two of the company’s drugs. Copaxone, a drug to treat multiple sclerosis, is Teva’s top-selling drug. It is an injectable drug that the FDA approved for reducing the frequency of relapses, although there are claims that it may also reduce the progression of the disability. Azilect is used for the treatment of Parkinson’s disease, either by itself in early stages of the disease, or with Levodopa in more advanced cases.
The Department of Justice and the False Claims Act
Teva said that the Justice Department is concerned about potential violations of the federal False Claims Act. With respect to the pharmaceutical industry, the False Claims Act is usually invoked where a company is involved in fraudulent pricing, billing and marketing schemes. Common examples include off-label marketing of drugs—that is, marketing drugs for uses that have not been approved by the FDA. Other False Claims include illegal kickbacks, such as paying physicians or showering them with lavish gifts in order to have them prescribe specific drugs. The False Claims Act can also be violated by overcharging the federal or state governments for medications.
In 2013, the Department of Justice recovered $1.8 billion from civil suits for false claims concerning drugs and medical devices sold to federally insured health programs, and recovered an additional $443 million on behalf of state Medicaid programs. Many of those lawsuits involved allegations of off-label marketing. For example, there was a $1.5 billion settlement with Abbott Laboratories, based on allegations that it illegally promoted Depakote to treat agitation and aggression in elderly dementia patients and schizophrenics—neither of which was approved by the FDA.
Prior Investigations Involving Teva
Teva itself is no stranger to DOJ scrutiny. In 2012, the Justice Department and the SEC had launched an investigation of Teva’s operations in Latin America. At issue was whether Teva had been in compliance with the Foreign Corrupt Practices Act, which makes it unlawful to pay foreign government officials for assistance in obtaining business. Teva supposedly conducted its own internal investigation and, in 2013, announced that it may have committed illegal bribery practices in Latin America, Eastern Europe, and Russia.