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Teva, Mylan and Heritage are stonewalling pricing probe, US lawmakers say

U.S. House Oversight and Reform Committee Chairman Elijah Cummings, D-Md., and Sen. Bernie Sanders, I-Vt., a presidential candidate, reignited their probe into three generic-drug manufacturers' pricing practices and accused the companies of stonewalling the lawmakers' 2014 congressional investigation.

"Obstructing or evading a congressional investigation, including withholding or concealing information, is a violation of federal law," Cummings and Sanders said in Aug. 13 letters to Teva Pharmaceutical Industries Ltd., Mylan NV and Heritage Pharmaceuticals Inc.

SNL ImageRep. Elijah Cummings
Source: Associated Press

Not only did the companies' "apparent obstruction" undermine the investigation, "but it may have caused further harm to patients and healthcare providers by delaying the discovery of evidence about the companies' price-fixing," Cummings and Sanders wrote.

The lawmakers said they were renewing their investigation of Teva, Mylan and Heritage in light of accusations by 44 states that the three companies and other manufacturers had engaged in price-fixing.

According to the states' complaint, filed in May at the U.S. District Court for the District of Connecticut, the generic manufacturers coordinated efforts to increase the prices of a number of drugs — many of which were the subject of Cummings' and Sanders' 2014 investigation.

The prices of some of those drugs had risen by as much as 8,281% between October 2013 and April 2014, the lawmakers noted.

Executives from Teva, Mylan and Heritage allegedly played a key role in the price hikes and also coordinated to obstruct the lawmakers' 2014 probe, Cummings and Sanders said.

They noted that Connecticut officials obtained an Oct. 3, 2014, email from Heritage's outside counsel to the drugmaker's then-CEO Jeffrey Glazer discussing how the three companies planned to coordinate their responses to the congressional requests and hold a conference call to "make sure everyone is on the same page."

The Heritage counsel told Glazer "the consensus at this point is that the responses will be 'polite f-u' letters."

"In my view, their 'polite f-u' letters designed to obstruct our investigation were clearly illegal," Sanders said in a June statement. Sanders and Cummings had called on the U.S. Department of Justice in June to investigate generic-drug makers for price-fixing and trying to obstruct the lawmakers' 2014 investigation.

Mylan denied that it has obstructed the 2014 congressional inquiry and said it has provided extensive documentation to investigating authorities and would continue to cooperate.

"With assistance from outside counsel we thoroughly investigated allegations made against our company and employees in the civil complaint filed by various state attorneys general, including the most recent allegation relating to obstruction," Mylan said in a statement to S&P Global Market Intelligence. "We have not found any evidence to corroborate the allegations. We are prepared to make our case in a court of law and are confident that the civil case against Mylan and its employees is meritless.”

In 2017, Heritage's Glazer and the company's former president, Jason Malek, entered into plea agreements with the Justice Department after being charged with criminal violations.

SNL Image

Sen. Bernie Sanders

Source: Associated Press

In late May, Heritage agreed to pay over $7 million in a civil settlement to resolve allegations of price-fixing, the Justice Department said.

But Sanders and Cummings noted that the Justice Department let Heritage enter into a three-year deferred prosecution agreement on the criminal charge and pay only $250,000 to avoid prosecution if the company complied with the terms and conditions of the agreement.

That amount, the lawmakers said, was "wholly insufficient to deter future criminal conduct by Heritage or other generic manufacturers."

"Civil enforcement will not be sufficient to protect consumers," Sanders and Cummings told U.S. Attorney General William Barr and another Justice official in a June 13 letter.

They urged the Justice Department to prioritize criminal enforcement of federal antitrust laws against generic-drug manufacturers.

"Vigorous antitrust enforcement is vital to ensuring that millions of Americans can afford the medications they need," the lawmakers said.