Attorney General James Uncovers Evidence That Teva Pharmaceuticals Lied to Evade Accountability for Opioid Crisis in New York

In New Filing, AG James Allege’s Teva USA’s Parent Company Falsely Swore it Had no role in
Its American Opioid Business Despite Significant Evidence of Integral Involvement

AG James Seeks Relief to Ensure Teva Fulfills Forthcoming Payment to New Yorkers

NEW YORK – New York Attorney General Letitia James took action to hold Teva Pharmaceutical Industries, Ltd. — the Israel-based parent company of Teva Pharmaceuticals USA — accountable for its role in the opioid crisis. In a motion by order to show cause, Attorney General James outlines how Teva Pharmaceutical Industries, Ltd. (Teva Parent) made significant and intentional misrepresentations to the Office of the Attorney General (OAG) and the court about its involvement with Teva Pharmaceuticals USA (Teva USA) and role in the opioids industry in the United States in order to evade legal action and accountability. New evidence uncovered by OAG shows that, despite sworn testimony provided to the court that Teva Parent transacted no business in the United States, held no property in the United States, and had no role in its American opioids business, Teva Parent was a primary decision maker for its American subsidiary, maintained property and employees in the country, and exerted control over its finances. In fact, Teva Parent use a complex web of shell corporations to transfer significant funds out of Teva USA and into offshore accounts it owns and control.

Attorney General James argues that for these reasons, the court should vacate its previous dismissal of Teva Parent from OAG’s opioid litigation to allow OAG an opportunity to examine Teva Parent’s real role in the opioid crisis and whether it compromises Teva USA’s ability to pay New York state by improperly transferring billions of dollars out of the company. The OAG is seeking further discovery into Teva USA to ensure that any forthcoming judgment stemming from a December 2021 jury decision that found Teva USA harmed New Yorkers and violated the state’s public nuisance laws will be paid.

“I made a promise to New Yorkers that we would do everything in our power to hold drug manufacturers and distributors accountable for their role in the opioid crisis that has devastated our communities,” said Attorney General James. “By making misrepresentations to escape our reach, Teva Pharmaceuticals underestimated our commitment to securing justice for the people of New York. We have already been successful in demonstrating the harm that Teva USA and others inflicted on New Yorkers, but this new evidence shows an even greater disregard for the pain and destruction that this company fueled. No amount of money will ease the trauma of those impacted by this crisis, but we will continue to stand up to Big Pharma and ensure they pay New Yorkers for the damage they caused.”

In March 2019, Attorney General James filed the nation’s most extensive lawsuit against the manufacturers and distributors of opioids for their role in fueling the opioid crisis. Teva Parent successfully removed itself from this litigation by arguing to the court that it had “no office, property, employees, or registered agent in the United States and does not transact business in the United States,” leaving its American subsidiary Teva USA as the head Teva defendant in OAG’s lawsuit. In its decision to dismiss OAG’s claims against Teva Parent, the court relied exclusively on representations made by Doron Herman, Senior Vice President and “Head of Tax” at Teva Parent. However, OAG uncovered evidence that clearly contradicted many of Mr. Herman’s statements and basic premise, including multiple legal filings where Teva Parent has admitted, among other things, that it was in fact a “multinational pharmaceutical company that develops, manufactures, and distributes a broad portfolio of pharmaceutical products in the United States and abroad,” and that it directly operated certain facilities in the United States.

In that sworn affidavit, Mr. Herman made several other clear misrepresentations to the court, including that Teva Parent was never involved in manufacturing, promoting, or selling opioids in the United States; did not control the day-to-day activities of Teva USA or Cephalon; and that Teva Parent did not control either subsidiaries’ finances.

In reality, Teva Parent was integrally engaged in the American opioid business and controls its American subsidiaries in every material way. Teva Parent oversaw the launch of certain opioid lines in the United States, managed decisions about whether to ship suspicious orders, routinely traveled to the United States to meet with senior federal government officials in connection with their opioid products, and conducted opioid-focused meetings with American physicians in the United States.

The OAG also obtained a forensic analysis of Teva USA and Teva Parent’s financial relationship, which demonstrate that Teva Parent has moved billions of dollars from Teva Parent’s American subsidiaries to offshore accounts and obtained substantial tax benefits in the United States and Israel by claiming that it managed and operated all of its subsidiaries.

In June 2022, Attorney General James secured up to $58.5 million from top drug manufacturer Mallinckrodt for fueling the opioid crisis. Late last year, Attorney General James won an opioid trial against Teva USA. In December 2021, Attorney General James reached a $200 million agreement with Allergan. In September 2021, Attorney General James secured $50 million from Endo to combat the opioid crisis. In July 2021, McKesson, Cardinal Health, and Amerisource Bergen agreed to pay $1 billion to New York for their role in the opioid epidemic. In June 2021, Attorney General James announced a $230 million settlement with Johnson & Johnson.

This matter was handled by Special Counsel Monica Hanna; Senior Advisor and Special Counsel M. Umair Khan; Assistant Attorneys General Leo O’Toole, Jennifer Simcovitch, and Eve Woodin; and Interns Brittany Sanok and Harry Reis. The trial and all of the settlements were all under the supervision of First Deputy Attorney General Jennifer Levy.

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