Teva, Other Drug Makers Negligent in Vetting Opioid Orders, Court Papers Allege

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File photo: Oxycodone pills are displayed in New York. August 29, 2018.
File photo: Oxycodone pills are displayed in New York. August 29, 2018.Credit: Mark Lennihan / AP

Israel’s Teva Pharmaceuticals and other drug companies were negligent in supervising the amount of narcotic painkillers they produced and sold, and did not meet the legal requirements for controlled substances, plaintiffs in a key trial on the alleged abuse of opioids in the United States are claiming.

The allegations were made in papers filed in federal court in Cleveland Friday by lawyers for two Ohio counties. They assert that the companies failed to vet potentially suspicious orders until after they were shipped, applied rudimentary controls and handed the job of halting dubious orders to sales departments with no incentive to block orders.

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Shares of Teva, which have plunged as the company grapples with a severe financial crisis, were down 2 percent at 27.45 shekels (7.76 USD) on the Tel Aviv Stock Exchange Sunday.

The Ohio trial, scheduled to begin in October, involves nearly 2,000 lawsuits filed by cities, counties and American Indian tribes against the pharmaceutical industry. They demand that the companies be held accountable for the widespread abuse of and addiction to prescription painkillers that may have caused some 200,000 deaths between 1996 and 2017.

Governmental authorities are taking the drugmakers to court on the grounds that the opioid epidemic came at a huge cost to taxpayers for the hospitalization of premature infants, rehabilitation treatment, adoption services for children whose parents died and higher crime rates.

“Their failure to identify suspicious orders was their business model: they turned a blind eye and called themselves mere ‘deliverymen’ with no responsibility for what they delivered or to whom,” the filing claims.

Under the law, companies producing drugs that pose an addiction risk must have a mechanism for ensuring they don’t reach buyers who will misuse them. Manufacturers and distributors are required to report suspicious orders – for example sudden, unusually large orders that deviate from a pattern – to the U.S Drug Enforcement Agency.

The plaintiffs assert that Teva and other major opioid makers allowed dubious orders to be shipped not by accident, but as part of their business model.

The pharmaceutical industry also filed briefs to the court Friday. Manufacturers of generic drugs, such as Teva, have argued that they do not market their opioids and should not be penalized for selling prescription drugs approved by the Food and Drug Administration.

For their part, retail drugstore chains argue that the plaintiffs offered no proof that opioids they distributed only to their own stores had been illegally diverted.

Excerpts of emails published over the weekend by The Washington Post, The New York Times and The Wall Street Journal shed light on the aggressive marketing tactics employed by at least some of the companies named in the suit, even as they recognized the growing opioid problem.

In one email, Barbara Martin, an employee of the Walgreens drugstore chain whose job was to review suspicious drug orders, expressed astonishment at how one store in a town with a population of 2,800 was ordering 3,271 bottles of the opioid oxycodone a month.

“I don’t know how they can even house this many bottles to be honest,” she wrote a colleague in a January 2011 email. But the next month, the company shipped another giant order to the same store.

Among the companies that put its sales department in charge of examining suspicious orders was Activis Generics, which Teva acquired in 2016. Activis made 26.4 billion painkiller tablets between 2006 and 2012.

That made it the second-largest manufacturer of opioids, after SpecGX (Purdue Pharma, the company most closely associated with the affair, accounted for just 3 percent), in those years.

Soon after Teva bought Activis it became obvious that the $39 billion deal was a disaster – Teva has overpaid at a time when prices for generic drugs were falling and the highly leveraged deal threatens the company financially to this day. However, the opioids affair threatens to magnify Teva’s financial woes because it faces a massive fine for Activis’ alleged role. The company sold generic versions of Purdue’s OxyContin and Endo’s Opana ER, two of the best-selling opioids.

The logo of Teva Pharmaceutical Industries.Credit: Amir Cohen / REUTERS

At a 2012 meeting, DEA officials suggested to Activis executives that they travel to South Florida – at that time a major center of alleged opioid abuse – to see for themselves what was happening, one document showed. Officials said they would find long lines at drugstore pharmacy counters and parking lots full of cars with out-of-state license plates. Pharmacists demanded payment in cash.

Despite these warnings, Activis did little to change its sales and marketing policies. At a different meeting between the two sides, DEA officials asked Activis to reduce its output of oxycodone, the active ingredient in OxyContin, and were told that the company would not do so.

Publication of the emails and other documents, which the pharmaceutical industry has fought in court, is likely to increase the pressure on the companies to reach a settlement as quickly as possible.

For Teva, however, such an outcome would work against company interests. The company believes it can convince Dan Aaron Polster, the federal judge who is presiding over the case, that it had no role in promoting opioid use and did nothing wrong.

Instead of a settlement, Teva would prefer a long, drawn-out trail. Analysts estimate the Israeli company could face a penalty of $1 billion to $4 billion as part of a settlement, a sum that would severely hurt the company at a time when its cash flow is diminished.

Teva has $26.7 billion in debt, most of it due to the Activis acquisition, of which $8.1 billion will come due between now and 2021.

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