Antitrust Body Probing Teva Over Distribution Firm

Investigation launched after Teva investor complained about the potential for price-fixing via its subsidiary, S.L.E.

The Antitrust Authority has recently opened an investigation into suspected antitrust violations by Teva Pharmaceutical Industries involving its distribution subsidiary, which also provides services to competing drug companies.

The authority is looking into whether Teva Pharmaceuticals might be in a situation to fix prices with its competitors through its S.L.E. drug distribution subsidiary (known by its Hebrew initials samekh, lamed and aleph) that the competitors also purportedly use.

The Antitrust Authority received a complaint claiming that S.L.E. makes it possible for Teva to gain access to pricing information of drugs that compete with Teva’s, and might therefore also make it possible for price-fixing to take place.

In the past, Teva rejected such complaints when they first surfaced and said S.L.E. and Teva are independent companies that both operate fully above board and in accordance with the law.

Yesterday, Teva issued the following additional statement: “The company confirms that S.L.E. received an inquiry from the Antitrust Authority.

“The inquiry will be responded to within the time agreed with the commission, and the company believes the response will satisfy the commission on the subject,” it added.

The Antitrust Authority has asked Teva and the other firms that use the services of S.L.E. for the contracts they have entered into with respect to the latter company.

In addition to distributing Teva products, S.L.E. distributes and sells pharmaceutical products in Israel from companies that directly compete with Teva, including Bayer’s Betaferon, which, like Teva’s Copaxone, is used for the treatment of multiple sclerosis; Novartis’ Nurofen competes with Teva’s Artofen and similar products produced by Janssen Pharmaceuticals and AstraZeneca.

The complaint to the Antitrust Authority alleges that since the CEO of S.L.E. is part of Teva’s management, Teva has potential access to the competitors’ pricing and marketing information, while the competitors, through that same CEO, have access to comparable data about Teva.

This arrangement could lead to price-fixing and coordination of sales and promotions, even if this is not done intentionally, it is claimed, in violation of the antitrust laws.

The commission received the complaint from an investor in Teva, who asserted that the company’s arrangement with its competitor could actually harm Teva and help the competition.

The investor said the connection via S.L.E. could do damage to Teva’s stock value, in that the products of the other drug companies could hurt sales of the comparable Teva product.

In addition, since Teva provides partial funding for S.L.E.’s expenses, the investor claims that this, in effect, is helping finance the competitors’ marketing efforts in Israel by facilitating the distribution of products that compete with Teva’s.