Teva Pharmaceuticals Industries Ltd. is under a federal investigation for potential violations of the False Claims Act. The company told its investors last month about the probe by revealing it in an annual report filed with the U.S. Securities and Exchange Commission (SEC). The U.S. attorney in New York, as a part of the probe, demanded on Jan. 8 to see documents related to sales, marketing and promotion of two of its drugs, the top-selling Copaxone and Azilect. Teva said it is complying with the subpoenas.
Copaxone is Teva’s best seller, bringing in $4.3 billion in global sales in 2013. Copaxone is a multiple sclerosis drug that is facing increased competition from generics. Sales in the U.S. have declined as a result of competition. The company’s orange book patent is set to expire in May, which could compound the issue. Teva told investors that the FDA granted approval to a new dose of the Copaxone drug.
The new dosage doubles the amount of the drug that is injected into multiple sclerosis patients, but limits the number of times they must undergo the injections. Teva’s financial results depend on the company’s ability to commercialize additional generic and specialty pharmaceutical products, the company told investors in the annual report. About 40 percent of the company’s total revenues in 2013 came from its specialty drugs, including Copaxone, the company reported.
The company reported that Azilect brought in $371 million to Teva during the quarter. Azilect is administered to patients with Parkinson’s disease, the second most common neurodegenerative disorder. The U.S. patents for Azilect won’t expire until 2016 and 2027. The company told investors that it was currently defending the validity and enforceability of its patents for Copaxone and Azilect in several lawsuits.
A putative class action was filed in December against Teva in New York federal court, alleging the company intentionally misled the media and investors about a dispute between the CEO of Teva and the board of directors. It was alleged by Plaintiff Jill Edison that the unexpected resignation of CEO Jeremy Levin – just days after the company denied he would resign – caused the company to lose $2.8 billion in market capitalization. Teva called the suit meritless and said it would vigorously defend itself against the class action. It will be interesting to see who prevails in this litigation.
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