Canada bans arm of drugmaker Teva from federal contracts over U.S. price-fixing scheme

Sanction akin to a slap on the wrist, expert says of ruling that U.S. subsidiary can’t contract with Canadian government until spring 2025

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OTTAWA — The American subsidiary of generic drug manufacturing giant Teva Pharmaceuticals has been banned from contracting with the Canadian government until spring 2025 for its role in a “domestic antitrust cartel” in the U.S.

Teva Pharmaceuticals USA was added to the Canadian government’s list of ineligible or suspended suppliers in October after it agreed to pay a US$225-million criminal penalty for its role in price-fixing conspiracies involving three drugs in the U.S.

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The ban only lasts until April 2025, although it could be extended, and does not apply to the company’s local subsidiary, Teva Canada. One business regulation lawyer said it isn’t much more than a slap on the wrist.

“It’s more symbolic. It’s like being in school and the teacher puts you in the corner. It’s not nice, but it’s better than the strap,” said Toronto-based lawyer Mark Warner.

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“The reason companies take these regimes really seriously in the United States is because there’s bite. But if you repeatedly go to subsidiaries that don’t do much business with the government, then there’s not a lot of bite.”

In a statement, Public Services and Procurement Canada (PSPC) spokesperson Jeremy Link said the company was added to the suspended supplier list after it was “charged with relevant offences in the United States,” although he did not elaborate which offences.

Teva spokesperson Yonatan Beker confirmed that the suspension was tied to Teva USA entering into a deferred prosecution agreement with the American government in August to resolve what U.S. authorities called a massive “domestic antitrust cartel.”

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“We are aware of – and disappointed by – the suspension, which the Canadian government imposed based on Teva USA having entered into a deferred prosecution agreement to resolve antitrust litigation in the United States,” Beker said.

But he insisted the ban had no bearing on any existing government contracts or the company’s ability to sell its products into Canada’s health-care programs, “to which Teva is one of the larger contributors of medicines.”

According to the government’s contract database, Teva Canada currently has at least two ongoing contracts with Ottawa. One is worth over $3 million for “multi-source pharmaceuticals” and the other, awarded in July, is for over $700,000-worth of generic pharmaceuticals.

The last federal contract with Teva Pharmaceuticals USA, a sole-source contract from the Department of National Defence for an adenovirus vaccine, appears to have ended in October, just days before the suspension began.

In August, the U.S. Department of Justice announced that Teva USA had agreed to pay US$225 million, the largest ever criminal penalty tied to a “domestic antitrust cartel,” and donate a further US$50 million in drugs for its participation in a massive price-fixing scheme that involved seven generic pharmaceutical companies.

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That followed a multi-year investigation by U.S. authorities that led to three charges for price-fixing in 2020 against Teva USA alleging that consumer were overcharged at least US$350 million.

Per the deferred prosecution agreement, Teva USA admitted its role in three price-fixing conspiracies involving different “essential medicines,” including a widely-used cholesterol medicine called pravastatin.

A statement of agreed facts between prosecutors and Teva USA revealed that, through an unnamed employee, Teva “suppressed and eliminated competition for certain drugs by agreeing with competitors to refrain from submitting bids and offers to sell to certain customers.”

Those other companies include Canadian generic giant Apotex as well as drugmakers Glenmark, Taro and Sandoz, who all also recognized their involvement in the schemes.

Warner said he’d like to see Canada’s Competition Bureau investigate the companies for any similar schemes here.

He also wondered why Apotex was not also banned from federal government contracts after it admitted to its role in the price-fixing scheme years before Teva.

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“Where is the Canadian competition case? Do people really quit their cartels at the border?” he questioned.

“Anything that progresses the use of the integrity regime is a step forward in terms of corporate conduct. But I think companies will take it more seriously when there’s bite,” he added.

Other than Teva USA, five other companies have been suspended or deemed ineligible for 10 years from bidding on Canadian government contracts.

In September, Canada Bread Co Ltd., one of the country’s biggest commercial bakeries, was added to the list for its role in one of most notorious price-fixing conspiracies in Canadian retail history.

With additional reporting by Jake Edmiston.

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