Teva Facing Probe for Potential False Claims Act Violations

Teva Pharmaceutical Industries said this week in a filing with the Securities and Exchange Commission that it is under investigation by the Department of Justice and SEC for potential violations of the False Claims Act.

The FCA, one of the government's most powerful weapons against fraud, prohibits companies from overcharging or otherwise defrauding the U.S. federal government. Individuals who discover fraud can sue on the government's behalf—known as qui tam claims—and collect up to 30 percent of the proceeds of a successful lawsuit.

The generic drug company said it received a subpoena on Jan. 8, 2014, from the U.S. Attorney for the Southern District of New York, seeking documents and information from January 2006 to the present related to the sales, marketing, and promotion of its multiple sclerosis drug Copaxone and Parkinson's disease treatment-drug Azilect.

“Teva is in the process of complying with the subpoena,” the company stated.

Teva is only the latest drug company to become ensnared in an FCA investigation. In 2013, the Justice Department recovered $3.8 billion in settlements and judgments from civil cases involving fraud against the federal government last year, marking the second largest annual recovery in FCA history. This figure is surpassed only by the $5 billion in recoveries in 2012, which included the record $3 billion healthcare fraud civil and criminal settlement GlaxoSmithKline reached with the government in July 2012, arising from the off-label, unapproved marketing and promotion of several of its drugs.

With a backlog of FCA cases already building, FCA enforcement is only expected to increase this year.

More Allegations

In addition to the FCA probe, Teva, beginning in 2012, also received subpoenas and informal document requests from the SEC and Justice Department for possible violations of the Foreign Corrupt Practices Act in certain countries. Teva said it “has provided and will continue to provide documents and other information… and is cooperating with the government in their investigations of these matters.”

Teva said it is also conducting an ongoing voluntary worldwide investigation into certain business practices for potential FCPA violations in Russia, certain Eastern European countries, certain Latin American countries, and other countries where it conducts business.

Teva, which has  engaged independent counsel to assist in its investigation, said it has brought these issues to the attention of the SEC and the Justice Department. “No conclusion can be drawn at this time as to any likely outcomes in these matters.”