Accusations of Colluding to Raise Generic Drug Prices Leads to 16% Dip In Teva Pharmaceutical Stock
On Monday, US traded Teva Pharmaceutical shares plunged over 16% after 44 states accused the company of orchestrating sweeping schemes with 19 other drug manufacturers for inflation of prices. Shares of Mylan, a drug-making company, also traded 10% lower during afternoon trading. The lawsuit that was filed by 44 states during late hours of Friday and is 500 pages long, is led by William Tong, Attorney General of Connecticut, who claims that 20 drug companies that include Teva USA, divided generic drugs market up systematically for avoiding competition with each other. It claimed that pharmaceutical executives sometimes conspired for either prevention of price drops or raising costs. The lawsuit was filed in US District Court, Connecticut.
This lawsuit comes at a time when Congress and US President Trump are both trying to lower high prices of prescription drugs that contributed to about 12% of all health-care expenditure in American in 2016. Trump administration made an announcement last week that pharmaceutical companies will now be required to disclose prescription medicines prices in TV commercials. It was an attempt to force drug-making companies to lower consumer costs. A Teva Pharmaceutical spokesperson said in response to the filed lawsuit that all allegations and accusations made in the new complaint and litigation are merely allegations that have no proof. He added that internal review of the issue is in process and that Teva has not done anything to attract criminal or civil lawsuits.
The company is fully committed to delivering good-quality medicines to all patients globally, while complying with every applicable regulation and law.
Congress created the generic drug industry in 1984 for trying to lower prices of drugs by allowing drug-making companies to produce identical versions of drugs after patents for brand-name drugs have expired. Based in Israel, Teva Pharmaceutical is the largest generic drug-manufacturing company in the world.