Drug Pricing Investigation
Teva—Copaxone

Staff Report
Committee on Oversight and Reform
U.S. House of Representatives
September 2020
oversight.house.gov

 September 30, 2020
Members of the Committee on Oversight and Reform
U.S. House of Representatives
Washington, D.C. 20515
Dear Colleague:
Last year, the Committee on Oversight and Reform launched one of the most
comprehensive and in-depth investigations of drug price increases that Congress has ever
conducted. Initiated by then-Chairman Elijah E. Cummings as our first investigation of the
116th Congress, the Committee sent letters on January 14, 2019, to some of the largest and most
profitable drug companies in the world. These letters sought a broad range of documents and
information regarding price increases, executive compensation, and strategies the companies use
to limit competition and maximize profits.
Based on dramatic price increases over many years, Chairman Cummings made this
sweeping investigation a top priority. He explained:
For the past decade, I have been trying to investigate the actions of drug companies for
all sorts of drugs—old and new, generic and brand-name. We have seen time after time
that drug companies make money hand over fist by raising the prices of their drugs—
often without justification, and sometimes overnight—while patients are left holding the
bill.
After Chairman Cummings passed away in October 2019, we continued to aggressively
pursue this investigation, repeatedly pressing the companies for documents and information in
response to the Committee’s requests.
As a result, the Committee has now reviewed more than a million pages of documents.
Many of these documents are internal corporate strategy documents and communications among
top executives that provide significant new insights into how and why drug companies keep
increasing their prices so dramatically. The Committee has given each company an opportunity
to explain the context and significance of these documents as we determined which to release to
the American public.
This week, in conjunction with our hearings with drug company CEOs, I will begin
releasing a number of staff reports describing these documents and explaining in detail the
following key findings based on our review:

 Members of the Committee on Oversight and Reform
Page 2
•

At the broadest level, the Committee’s investigation shows that although drug
companies make products we all need for our health and well-being, their
skyrocketing price increases are simply unsustainable going forward.

•

The Committee’s investigation also reveals new details about the specific tactics
drug companies are using to raise prices, maximize profits, and suppress
competition among other companies.

•

Finally, the Committee’s investigation demonstrates that drug companies are
taking full advantage of the federal law that currently prohibits Medicare from
negotiating directly with drug companies to lower prices. The drug companies
are bringing in tens of billions of dollars in revenues, making astronomical profits,
and rewarding their executives with lavish compensation packages—all without
any apparent limit on what they can charge.

One of the key legislative reforms being considered by Congress is to finally allow
Medicare to negotiate directly with drug companies to lower prices. On March 8, 2017,
Chairman Cummings went to the White House with Committee Member Peter Welch to meet
with President Trump, to present their draft legislation to implement this change, and to seek his
support for their legislation.
They were hopeful because President Trump, as a candidate and as President-elect, had
promised that Americans could save hundreds of billions of dollars if Medicare were allowed to
negotiate directly with drug companies. “We don’t do it,” the President said. “Why? Because
of the drug companies.” He said the U.S. must “create new bidding procedures for the drug
industry.” He added: “Pharma has a lot of lobbies and a lot of lobbyists and a lot of power, and
there’s very little bidding on drugs.” He pledged to create a “fair and competitive bidding
process” that would result in prices “coming way, way, way down.” He also warned that the
pharmaceutical industry is “getting away with murder.”
According to a statement from Chairman Cummings after the White House meeting,
President Trump “seemed enthusiastic about the idea” and pledged to work together. However,
despite numerous good faith efforts by Chairman Cummings to follow-up, President Trump
never responded again. Instead, he abandoned his commitment to work jointly on this issue.
On December 12, 2019, the House of Representatives passed H.R. 3, the Elijah E.
Cummings Lower Drug Costs Now Act, landmark legislation that includes the key provision to
allow Medicare to negotiate directly with drug companies to lower prices. Unfortunately, this
legislation has languished as President Trump openly opposed it and Senate Republicans refused
to schedule a vote. The White House issued a statement opposing the legislation, declaring, “If
H.R. 3 were presented to the President in its current form, he would veto the bill.”
Instead of supporting H.R. 3, taking on the pharmaceutical industry, and giving Medicare
the authority to negotiate directly, President Trump appointed former pharmaceutical industry
executives to key health care positions, including Secretary of Health and Human Services Alex
Azar and former Director of White House Domestic Policy Council Joe Grogan. Mr. Grogan,

 Members of the Committee on Oversight and Reform
Page 3
who met with drug company executives on multiple occasions, led the Administration’s
opposition to H.R. 3, even penning an op-ed opposing the legislation a week before it was passed
by the House of Representatives.
Now, as the November election draws near, President Trump is scrambling to create the
impression that he is addressing a problem he has failed to take on for the past four years. But
his actions—such as claiming he will send seniors a “$200 drug discount card” for medications
that cost tens of thousands of dollars per month, or approving a “demonstration project” after
failing to reach a voluntary deal with the pharmaceutical industry—are deficient and
inconsequential, according to experts.
The bottom-line is that, as a result of the President’s decision to go back on his campaign
promise, drug prices have continued to skyrocket over the past four years. A recent report found
that drug companies have raised the list prices of more than 600 single-source brand name drugs
by a median 21.4% between January 2018 and June 2020.
My hope is that these hearings and staff reports will shed additional light on this problem
and spur the President and the Senate to finally act on H.R. 3. While the current trajectory of
drug prices rewards corporate executives handsomely, it is not sustainable for the American
taxpayers or American families.
Sincerely,

____________________________
Carolyn B. Maloney
Chairwoman

 EXECUTIVE SUMMARY
This staff report describes the actions of Teva Pharmaceuticals in repeatedly raising the
price of Copaxone, a drug used to treat multiple sclerosis. Copaxone is Teva’s leading brand
name medicine, accounting for nearly a fifth of the company’s North America net revenue from
2017 to 2019.
The Committee has reviewed more than 300,000 pages of internal documents,
communications and data related to Copaxone. This staff report focuses on Teva’s pricing
practices, business strategies to maximize sales, and tactics it uses to minimize generic
competition.
•

Uninhibited Price Increases: Since launching Copaxone in 1997, Teva raised the price
of the drug 27 times. Due to these price increases, a yearly course of Copaxone is priced
at nearly $70,000 today as compared to less than $10,000 in 1997.

•

Price Increases Driving Growing Corporate Revenue: Teva’s price increases enabled
the company to collect more than $34 billion in Copaxone net U.S. revenue since
launching the drug in 1997. Teva’s net U.S. revenue for Copaxone increased from $411
million in 2002 to over $3.3 billion in 2016.

•

Millions in Executive Compensation and Bonuses: As Teva raised the price of
Copaxone, it paid its top executives millions of dollars per year. From 2012 to 2017—
Teva’s peak years for U.S. Copaxone revenue—the company paid its top executives more
than $190 million. Lower level employees were aware of the direct link between their
compensation and Copaxone’s price and revenue. In response to a February 2017
advisory notice that generic competition to Copaxone had been delayed, one executive
told his colleagues that the delay “[m]ight be good for cash flow and debt pay down and
some of your bonuses.”

•

Targeting the U.S. for Higher Prices and Lack of Medicare Negotiation: With the
federal government prohibited from negotiating directly with drug companies to lower
prices, Teva targeted the U.S. market for price increases while maintaining or cutting
prices for the rest of the world. Internal Teva documents warned that the legislative
reform that posed the greatest threat to Teva’s future revenue was “Medicare Reform:
Removal of government non-interference.” In 2015, the net price of Copaxone 40 mg/ml
was $126 per day in the U.S., as compared to $33 in Germany, $26 in Spain, $25 in the
United Kingdom, and $18 in Russia. Teva emphasized that one of its key strengths was
its ability to “increase prices successfully,” which was “influenced heavily by US [Teva’s
U.S. Business] being allowed to hike prices.”

i

 •

Lobbying Campaign Opposing Reform: In response to the threat of reform, Teva’s
senior executives engaged in an intense lobbying campaign, including meeting with
senior Trump Administration officials on three occasions in 2017. Two meetings
included Joe Grogan, former pharmaceutical executive and then-Associate Director of
Health Programs at the Office of Management and Budget. Mr. Grogan later became
Director of the Domestic Policy Council in the White House, where he mobilized the
Administration against Medicare negotiation.

•

Costs to Medicare: Medicare spent hundreds of millions of dollars more on Copaxone
each year because of its inability to negotiate directly to lower prices. Teva’s internal
data shows that from 2010 to 2013, taxpayers and patients would have spent $1.4 billion
less on Copaxone if Medicare had received the same price as the Department of Defense
and Department of Veterans Affairs, which are permitted to negotiate directly.

•

Harm to Patients: Teva’s price increases on Copaxone have resulted in thousands of
dollars in out-of-pocket costs for U.S. patients and have left many unable to afford the
drug. A recent study found that the median annual out-of-pocket cost for a Medicare
patient on Copaxone was $6,672 in 2019. Even Teva’s own employees could not afford
Copaxone at its price. In one July 2018 exchange, a Teva employee explained that she
could no longer afford Copaxone because she would have to pay $1,673.33 out of pocket
as compared to $12 for Mylan’s generic product. Ultimately, Teva gave the employee
free product, a solution unavailable to most Copaxone patients

•

Donation to Third-Party Foundations as “Investment” to Drive Medicare Sales:
Internal presentations, emails, and payment authorization documents reveal that between
2008 and 2017, Teva paid hundreds of millions of dollars to third-party foundations to
subsidize co-pay and other cost-sharing obligations incurred by Medicare Part D patients.

ii

 Teva referred to these donations as an “investment” for future returns, with an
expectation that the donations would drive Copaxone sales. For example, Teva’s 2008
Copaxone Work Plan estimated that the company would spend approximately $97
million on “Medicare Financial Assistance” between 2008 and 2011 and that this
expenditure would result in the sale of an additional 155,113 units of Copaxone worth
nearly $300 million.
•

Donations to Third-Party Foundations Continuing Through 2018: The Department
of Justice recently filed a civil suit against Teva alleging that its donations from 2006 to
2015 violated the federal Anti-Kickback Statute. The Committee’s investigation suggests
that Teva continued this conduct through at least 2018—three years beyond the scope of
DOJ’s complaint. Teva’s donations from 2016 to 2018 appear to have continued to be
made with the expectation that they would be delivered to Copaxone patients to drive
Teva’s Medicare sales.

•

Profit-Driven Co-Pay Assistance Program: Teva’s internal strategy documents
frequently emphasized the rate of return of its co-pay assistance program for commercial
patients. A 2011 presentation touted that Teva’s co-pay program had an average return
on investment of 451%.

iii

 According to internal figures, Teva collected $257.5 million in net revenue from $54.6
million in expenditures on commercial co-pay programs in 2014 and $148.2 million in
net revenue from $68.4 million in expenditures on the programs in 2015.
•

New Dosage as “Generic Defense Strategy”: In 2014, Teva introduced a 40 mg/ml
formulation of Copaxone in part to extend its monopoly pricing for Copaxone by shifting
patients to that formulation—which still enjoyed market exclusivity—before the 20
mg/ml formulation began facing lower-priced generic competition. To push patients to
the 40 mg/ml formulation of Copaxone, Teva increased the price of the 20 mg/ml
formulation. To press patients to make the move, Teva explored a plan to “Discontinue
20mg Financial Programs (Patient Services),” its financial assistance program for
patients. Teva’s strategy was successful in maintaining its profits and limiting
competition. Experts estimate that the strategy cost the U.S. health care system between
$4.3 and $6.5 billion in excess spending.

•

Exclusionary Tactics to Limit Generic Competition: After Mylan introduced a lowerpriced generic version of Copaxone 40 mg/ml in October 2017, Teva implemented
several new exclusionary tactics to limit generic competition and maintain profits. First,
Teva contracted with specialty pharmacies and pharmacy benefit managers to limit
generic substitution. Second, Teva lobbied doctors to write prescriptions for Copaxone
that prohibited generic substitution. Third, Teva used its patient programs to convince
patients to remain on the more expensive brand name version of the drug. Teva
summarized these strategies in the following slide to its Board of Directors:

iv

 •

Price Increases Not Justified by Rebates: Teva’s internal data undermine the
pharmaceutical industry’s claims that price increases are the result of increased rebates,
discounts, and other fees provide to pharmacy benefit managers. The average net price
per unit of Copaxone—the amount of money the company makes on the drug after all
rebates and discounts—increased for both the 20 mg/ml and 40 mg/ml doses of
Copaxone from 2009 to 2017. The annual rise in average net price ended only after
Mylan introduced generic versions of both doses.

•

Price Increases Not Justified by R&D: Contrary to its public talking points, Teva
invested only a small portion of its Copaxone revenue in further research and
development to help Copaxone patients. Teva identified a total of $689 million in
research and development expenditures related to Copaxone since 1987—only 2% of its
$34.2 billion in net U.S. revenue of Copaxone from 2002 to 2019.

v

 TABLE OF CONTENTS
I.

PRICE INCREASES ..................................................................................................................... 1

II.

GROWING CORPORATE REVENUE ...................................................................................... 2

III.

EXECUTIVE BONUSES .............................................................................................................. 3

IV.

HIGH U.S. PRICES AND LACK OF MEDICARE NEGOTIATION ..................................... 5

V.

VI.

VII.

VIII.

IX.

A.

Targeting U.S. Market for Price Increases ..................................................................... 5

B.

Cost to Medicare and Patients ......................................................................................... 8

C.

Lobbying Campaign to Prevent Negotiation and Other Reforms .............................. 10

PROFIT-DRIVEN PATIENT SUPPORT PROGRAMS ......................................................... 12
A.

Commercial Co-Pay Program ....................................................................................... 13

B.

Donations to Third-Party Foundations ......................................................................... 14

C.

Patient Services ............................................................................................................... 22

NEW DOSE AS “GENERIC DEFENSE STRATEGY” .......................................................... 24
A.

Launching Copaxone 40 mg to Extend Monopoly and Minimize Competition ........ 24

B.

Price Increases, Contracting, and Marketing to Pressure Patients to Switch........... 30

C.

Strategy Successfully Maintained High Prices ............................................................. 33

EXCLUSIONARY TACTICS TO LIMIT GENERIC COMPETITION............................... 35
A.

“House Brand” Contracting Strategy ........................................................................... 36

B.

“Dispense as Written” Campaign.................................................................................. 39

COSTS DO NOT JUSTIFY PRICE OF COPAXONE ............................................................ 41
A.

Rebates and Manufacturing........................................................................................... 41

B.

Research and Development ............................................................................................ 42

CONCLUSION ............................................................................................................................ 45

 I.

PRICE INCREASES

Copaxone (glatiramer acetate) is an injectable drug approved to treat relapsing forms of
multiple sclerosis (MS). MS is a disease of the central nervous system that afflicts nearly one
million adults in the United States. 1
Teva first launched Copaxone in March 1997 as a 20 mg/ml injection administered once
per day. 2 In 2014, Teva launched a 40 mg/ml injection administered three times per week and at
least 48 hours apart. 3
Since launching Copaxone 20 mg/ml, Teva has raised the price of the drug 27 times. As
a result of Teva’s price increase, the price of Copaxone 20 mg/ml today is almost ten times the
price of the drug in 1997. Today, a monthly course of Copaxone 20 mg/ml is priced at $7,114,
as compared to $769.15 in 1997. A monthly course of Copaxone 40 mg/ml is priced at $5,832
today. 4
(See Section VI for Teva’s business rationale for launching the 40 mg/ml dose of
Copaxone and pricing Copaxone 40 mg/ml lower than Copaxone 20 mg/ml as a tactic to limit
generic competition.)
MS patients take Copaxone month after month, year after year. The price of an annual
course of Copaxone 20 mg/ml has jumped from $9,230 in 1997 to $85,368 today. 5 The cost of
an annual course of Copaxone 40 mg/ml is $69,984. 6
Figure 1 below shows the increase in the price of a monthly course of Copaxone
injections from 1997 to the present.

1

Teva Pharmaceuticals Industries, Ltd., Annual Report (Form 10-K) for Fiscal Year 2019 (Feb. 21, 2020)
(online at www.sec.gov/ix?doc=/Archives/edgar/data/818686/000119312520044221/d852939d10k.htm); National
Multiple Sclerosis Society, Landmark Study Estimates Nearly 1 Million in the U.S. Have Multiple Sclerosis (Feb.
15, 2019) (online at www.nationalmssociety.org/About-the-Society/News/Landmark-Study-EstimatesNearly%C2%A01-Million-in-the-U).
2

Letter from Robert Temple, Director, Office of Drug Evaluation, Food and Drug Administration, to
Debora Jaskot, Teva Pharmaceuticals USA (Dec. 20, 1996) (online at
www.accessdata.fda.gov/drugsatfda_docs/nda/pre96/020622Orig1s000rev.pdf).
3

Letter from Billy Dunn, Acting Director, Division of Neurology Products, Food and Drug Administration,
to Dennis Ahern, Teva Pharmaceuticals USA (Jan. 28, 2014) (online at
www.accessdata.fda.gov/drugsatfda_docs/appletter/2014/020622Orig1s089ltr.pdf).
4
IBM Micromedex Redbook, Wholesale Acquisition Cost and Average Wholesale Price History for
Copaxone.
5

This calculation is based on the Whole Sale Acquisition cost of 12 monthly packages of Copaxone 20
mg/ml, each of which includes 30 syringes.
6

This calculation is based on the Whole Sale Acquisition cost of 12 monthly packages of Copaxone 40
mg/ml, each of which includes 12 syringes.

1

 Figure 1: Copaxone Price Increases 1997-2020
$8,000.00
$7,114.00
$7,000.00
$5,832.00

Mothly Cost

$6,000.00
$5,000.00
$4,641.24

$4,000.00
$3,000.00
$2,000.00
$1,000.00
$769.15

20 mg/ml

II.

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

$-

40 mg/ml

GROWING CORPORATE REVENUE

Teva’s price increases have fueled significant growth in net U.S. revenue for Copaxone.
In 2002, Teva reported net U.S. revenue of $411 million. Net U.S. revenue grew consistently for
the next 11 years, peaking at $3.2 billion in 2013. From 2014 to 2017, Copaxone net U.S.
revenue leveled at between $3.1 billion and 3.3 billion per year—nearly an eight-fold increase
over 2002. Teva’s net U.S. revenue began to decrease only when the first 40 mg/ml generic and
the second 20 mg/ml generic came to market in October 2017. 7
Figure 2 below reflects Teva’s net U.S. revenue over time. 8

7

Letter from Kirkland and Ellis LLP, on behalf of Teva Pharmaceuticals Industries, Ltd., to Chairwoman
Carolyn B. Maloney, Committee on Oversight and Reform (Aug. 25, 2020); Letter from Kirkland and Ellis LLP, on
behalf of Teva Pharmaceuticals Industries, Ltd., to Chairman Elijah E. Cummings, Committee on Oversight and
Reform (July 18, 2019); Teva Pharmaceuticals Industries, Ltd., Annual Reports (Forms 10-K or 20-F) (2002-2019)
(online at https://ir.tevapharm.com/financials/sec-filings/default.aspx).
8

Id.

2

 Figure 2: Net U.S. Revenue for Copaxone

III.

EXECUTIVE BONUSES

From 2012 to 2017, Teva’s net U.S. revenue for Copaxone averaged more than $3 billion
per year, driven in part by its executives’ decision to raise the list price of Copaxone from $3,475
to $5,832 per month. 9 Teva’s top executives were in turn paid more than $190 million in total
compensation over that same period. 10
Teva’s compensation policy makes clear that a significant portion of its executive
compensation is based on “overall company performance measures,” including net revenue and
9

Teva Pharmaceuticals Industries, Ltd., Annual Reports (Forms 10-K or 20-F) (2002-2019) (online at
https://ir.tevapharm.com/financials/sec-filings/default.aspx); IBM Micromedex Redbook, Wholesale Acquisition
Cost and Average Wholesale Price History for Copaxone. The 2012 price is for a daily 20 mg/ml dose on January
1, 2012, while the 2017 price is for a 40 mg/ml dose taken three times per week (which is less expensive than the 20
mg/ml dose) on Jan. 1, 2017. The 40 mg/ml dose was not introduced until 2014. From 2012 to 2017, the average
net price of Copaxone increased from $3,113 to $3,886 per month. Letter from Kirkland and Ellis LLP, on behalf of
Teva Pharmaceuticals Industries, Ltd., to Chairwoman Carolyn B. Maloney, Committee on Oversight and Reform
(Aug. 25, 2020); Letter from Kirkland and Ellis LLP, on behalf of Teva Pharmaceuticals Industries, Ltd., to
Chairman Elijah E. Cummings, Committee on Oversight and Reform (July 18, 2019).
10

Teva Pharmaceuticals Industries, Ltd., Annual Reports (Forms 10-K or 20-F) (2002-2019) (online at
https://ir.tevapharm.com/financials/sec-filings/default.aspx). The 2012 to 2016 figures are based on Teva’s
reporting of aggregate executive compensation for executive officers. The 2017 figure is based on Teva’s reporting
of compensation for ten named executive officers.

3

 earnings. 11 From 2012 to 2017, Copaxone’s net U.S. revenue made up 15% of Teva’s net
worldwide revenue for all products. Teva’s price increases for Copaxone had a direct impact on
executive bonuses. 12
Figure 3 below provides compensation data for Teva’s highest compensated executives in
2015 and 2016—two of the years with the highest net revenue from Copaxone. 13
Figure 3

Internal documents produced by Teva suggest that employees at all levels of the company
were incentivized to exceed financial targets. For example, a 2016 strategy presentation

11

Id.; see also Letter from Kirkland and Ellis LLP, on behalf of Teva Pharmaceuticals Industries, Ltd., to
Chairwoman Carolyn B. Maloney, Committee on Oversight and Reform (Aug. 28, 2020)
12

Id.; Letter from Kirkland and Ellis LLP, on behalf of Teva Pharmaceuticals Industries, Ltd., to
Chairwoman Carolyn B. Maloney, Committee on Oversight and Reform (Aug. 25, 2020); Letter from Kirkland and
Ellis LLP, on behalf of Teva Pharmaceuticals Industries, Ltd., to Chairman Elijah E. Cummings, Committee on
Oversight and Reform (July 18, 2019).
13

Teva Pharmaceuticals Industries, Ltd., Annual Reports (Forms 10-K or 20-F) (2015-2017) (online at
https://ir.tevapharm.com/financials/sec-filings/default.aspx).

4

 recommended that the company build “more attractive career paths for pricers, train them and
reward them based on profit.” 14
Email exchanges between employees show that they were aware of the direct link
between compensation and Copaxone sales. In response to a February 2017 advisory notice that
generic competition to Copaxone had been delayed, one executive told his colleagues that the
delay “[m]ight be good for cash flow and debt pay down and some of your bonuses.” 15

IV.

HIGH U.S. PRICES AND LACK OF MEDICARE NEGOTIATION

Under current law, the federal government is prohibited from negotiating directly with
pharmaceutical companies to lower prices for Medicare beneficiaries. 16 With the federal
government unable to negotiate, Teva targeted the U.S. market for price increases while
maintaining or cutting prices in the rest of the world.
A.

Targeting U.S. Market for Price Increases

Teva’s 2007-2009 strategic plan warned that the company was facing “downward prices
[sic] pressure in Europe.” 17 Over the same two year period, Teva raised the U.S. price of
Copaxone by 60%. 18 By 2013, Teva was charging more than three times as much for Copaxone

14

TEVA_HCO_IC_005040409, at Page 42.

15

TEVA_HCO_IC_005008955 (Feb. 2017 email regarding delay of generic Copaxone 40 mg because of
fill/finish issues).
16

42 U.S.C. § 1395w-111.

17

TEVA_HCO_IC_005182598, at Slide 19.

18

Id.; IBM Micromedex Redbook, Wholesale Acquisition Cost and Average Wholesale Price History for

Copaxone.

5

 in the United States than in England, New Zealand, the Netherlands, and Spain, according to an
independent study by the International Federation of Health Plans. 19
An internal Teva presentation from 2016 compared the price of Copaxone in the United
States to the rest of the world. According to the presentation, the 2015 net price of Copaxone 20
mg/ml was $97 per day of therapy in the United States as compared to $18 per day in Russia,
$24 per day in Italy, $26 per day in the United Kingdom, $28 per day in France, $29 per day in
Spain, $33 per day in Canada, and $40 per day in Germany. The net price difference between
the U.S. and the rest of the world for Copaxone 40 mg/ml was even more drastic: $126 per day
of therapy in the U.S., as compared to $18 per day in Russia, $25 per day in the United
Kingdom, $26 per day in Spain, and $33 in Germany. 20
Figure 4 below summarizes the prices listed in the presentation.
Figure 4: 2015 Net Price Per Day of Therapy 21
Copaxone 20 mg/ml

Copaxone 40 mg/ml

$150

$150

$126

$97
$75

$75
$40

$33 $29 $28
$26 $24
$18

$0

$33

$26

$25

$18

$0
U.S.
FR

GER
UK

CAN
IT

ESP
RU

U.S.

Germany

Spain

UK

Russia

In another 2016 presentation, Teva emphasized that one of its key strengths was its
ability to “increase prices successfully,” which was “influenced heavily by US [Teva’s U.S.
Business] being allowed to hike prices.” 22

19

International Federation of Health Plans, 2013 Comparative Price Report: Variation in Medical and
Hospital Prices by Country (2013) (online at https://s3.amazonaws.com/assets.fiercemarkets.net/public/005LifeSciences/ifhpreport.pdf).
20

TEVA_HCO_IC_005025464, at Slide 27.

21

Id.

22

TEVA_HCO_IC_005040409, at Slide 32

6

 A draft 2017 presentation comparing Copaxone pricing trends in the United States to
Europe emphasized that in the United States, “Premium prices are available—current list prices
average $80k per patient per year,” while in Europe, “Current list price (average $13k per patient
per year) [is] much lower than US price.” The presentation also emphasized that in the United
States, “Payers do not generally dictate prescribing despite higher cost.” 23

23

TEVA_HCO_IC_005199492, at Slide 12.

7

 By contrast, Teva has been forced to decrease the list price of Copaxone 40 mg/ml in
other countries. For example, an October 2017 internal presentation noted that Australia was
expected to impose “a mandatory price decrease of 15%” in 2018 because Copaxone was an “old
product” and that France was expected to impose a mandatory price decrease of 11% when a
generic version of the drug entered the market in 2019. 24 In May 2018, Teva executives
expressed concerns that an expected “25-30% transparent price reduction on Copaxone 20 and
Copaxone 40 in Canada” might “harm the situation of Copaxone in US in any way (e.g. from
public perception of view, due to the large difference in price levels).” 25
B.

Cost to Medicare and Patients

Taxpayers and patients spent hundreds of millions of dollars more on Copaxone each
year because of the prohibition on Medicare’s ability to negotiate directly for lower prices.
Teva’s internal data show that government payers that are permitted to negotiate directly
with manufacturers—such as the Department of Defense (DOD) and the Department of Veterans
Affairs (VA)—obtained much larger discounts on Copaxone, even when there was no lowerpriced generic on the market. 26 In 2013, the average net price that VA and DOD paid for a
monthly course of Copaxone 20 mg/ml was $2019.88, while Medicare Part D plans paid on
average $4,206.33. If Medicare had secured the same net price as the VA and DOD, Medicare
would have saved more than $1.4 billion on Copaxone from 2010 to 2013. 27 Figure 5 below
highlights the differences in these discounts and the lost savings.
Figure 5: Lost Medicare Part D Savings for Copaxone 20 mg/ml 28

24

TEVA_HCO_IC_005093861, at Slide 2.

25

TEVA_HCO_IC_005008283.

26

Although the Veterans Health Care Act of 1992 set a ceiling price that may be charged to the Department
of Veterans Affairs (VA), the Department of Defense, the Public Health Service, and the Coast Guard for
prescription drugs, the VA uses a national formulary to secure even steeper discounts on behalf of beneficiaries. See
Health Affairs, Health Policy Brief: Veterans Health Administration (Aug. 10, 2017) (online at
www.healthaffairs.org/do/10.1377/hpb20171008.000174/full/healthpolicybrief_174.pdf).
27

See Letter from Kirkland and Ellis LLP, on behalf of Teva Pharmaceuticals Industries, Ltd., to
Chairwoman Carolyn B. Maloney, Committee on Oversight and Reform (Sept. 25, 2020) (stating average discount
percentages for Medicare Part D and “VA/DOD”). To arrive at this calculation, Committee staff also relied on gross
sales data published by the Centers for Medicare and Medicaid Services; See Centers for Medicare and Medicaid
Services, Medicare Part D Drug Spending Dashboard & Data (online at www.cms.gov/Research-Statistics-Dataand-Systems/Statistics-Trends-and-Reports/Information-on-Prescription-Drugs/MedicarePartD).
28

Id.

8

 Medicare Part D also paid thousands of dollars more for Copaxone 40 mg/ml than the
VA or DOD. Figure 6 below shows the difference between Medicare Part D’s net price for
Copaxone 40 mg/ml and VA and DOD’s net price for Copaxone 40 mg/ml.
Figure 6: Medicare Part D’s Higher Price for Copaxone 40 mg/ml 29

Teva’s price increases on Copaxone have imposed thousands of dollars in out-of-pocket
costs on U.S. patients and have left many unable to afford the drug. A recent Kaiser Family
Foundation study found that the median annual out-of-pocket cost for a Medicare patient on
Copaxone was $6,672 in 2019. 30
Internal documents indicate that Teva executives understood that their price increases
contributed to higher out-of-pocket costs. For example, in 2016, one Teva employee reported to
General Manager of Teva Neuroscience John Hassler, “you can definitely see a trend in the
increase in OOP [out of pocket] costs that the payers are shifting to patients and some of this
may be our price increases as well.” 31

29

Id.

30

Kaiser Family Foundation, The Out-of-Pocket Cost Burden for Specialty Drugs in Medicare Part D in
2019 (Feb. 2019) (online at http://files.kff.org/attachment/Issue-Brief-the-Out-of-Pocket-Cost-Burden-for-SpecialtyDrugs-in-Medicare-Part-D-in-2019).
31

TEVA_HCO_IC_005001166 (Aug. 2016 email exchange analyzing Teva’s expenditures on patient
assistance programs).

9

 Even Teva’s own employees could not afford Copaxone at its price. In one July 2018
exchange, a Teva employee explained that she could no longer afford Copaxone because she
would have to pay $1,673.33 out of pocket as compared to $12 for Mylan’s generic. Ultimately,
Teva gave the employee free product, a solution unavailable to most Copaxone patients. 32
Some Teva employees urged the company to slow its price increases or reduce the price
of Copaxone. According to a December 2017 spreadsheet summarizing employee responses to
solicitation for social impact ideas, one employee proposed capping price increases and reducing
the price of Copaxone, and another suggested that Teva should commit to not increasing list
prices above a certain percentage each year. 33
C.

Lobbying Campaign to Prevent Negotiation and Other Reforms

Teva’s internal documents reveal a deep concern that Congress would pass drug pricing
legislation to allow direct negotiations that could harm the company’s bottom line. In response,
Teva launched a “Drug Price Task Force” and an associated lobbying campaign to identify the
risks of various potential reforms and develop a strategy to defeat them. 34
In May 2017, the Drug Price Task Force emphasized that the reform presenting the
greatest threat to Teva’s future revenue was “Medicare Reform: Removal of government noninterference,” which refers to repealing the prohibition on Medicare negotiating directly with
drug companies to lower prices. 35
In response to the threat of reform, Teva engaged in an intense lobbying campaign. From
2017 to 2020, Teva reported spending $11.6 million to lobby the House of Representatives and

32

TEVA_HCO_IC_005127328.

33

TEVA_HCO_IC_005062856.

34

TEVA_HCO_IC_005121399.

35

Id.

10

 the Senate. 36 Senior Teva executives also met with senior Trump Administration officials on
three occasions in 2017. 37 Two of these meetings included Joe Grogan, former pharmaceutical
executive and then Associate Director of Health Programs at the Office of Management and
Budget. 38
Mr. Grogan later became the Director of the Domestic Policy Council at the White
House, where he argued against Medicare negotiation—the same reform that Teva’s Drug Price
Task Force had identified as the company’s greatest threat. 39
Teva also relied on the trade association, Pharmaceutical Research and Manufacturers of
America (PhRMA), to lobby against reforms that would lower the price of drugs like Copaxone.
For example, in May 2017, Teva executives discussed sharing talking points with PhRMA to
address criticisms of Copaxone’s price. The talking points emphasized that “Teva makes
financial contributions/donations to patient assistance funds annually to help patients with out of
pocket costs.” 40 As explained in Section V below, Teva’s contributions and donations were in
its own self-interest and drove millions of dollars in additional sales.
Teva’s talking points for PhRMA attempted to justify Copaxone’s price by stressing that
“Copaxone is a complex molecule which requires precise manufacturing capabilities” and noting
that manufacturers “offer different levels of discounts and rebates to make the medications more
affordable.” 41 As explained in Section VIII below, Teva’s own internal data undermine its
claims that manufacturing costs or rebates drove its price increases for Copaxone.
In an email to Teva’s Senior Director of Public Policy in April 2017, a Teva executive
identified “two issues I would like to see Pharma start lobbying for:” imposing a statute of
limitation on when states could seek Medicaid rebates; and second, by reducing or exempting
Medicaid rebates on beneficiaries who are dually eligible for Medicaid and Medicare. 42

36

United States Congress Lobbying Disclosure Database, Query Results for Teva Pharmaceuticals USA,
Inc. (online at www.senate.gov/legislative/Public_Disclosure/LDA_reports.htm) (accessed Sept. 28, 2020).
37

Letter from Kirkland and Ellis LLP, on behalf of Teva Pharmaceuticals Industries, Ltd., to Chairman
Elijah E. Cummings, Committee on Oversight and Reform (Mar. 19, 2019).
38

Id.

39

Grogan and Philipson: We Can Lower Drug Prices and Spur Medical Innovation. Pelosi’s H.R. 3 is
Not the Answer, Fox Business (Dec. 6, 2019) (online at www.foxbusiness.com/money/lower-drug-prices-medicalinnovation-pelosi-hr3-grogan-philipson).
40

TEVA_HCO_IC_005022375.

41

Id.

42

TEVA_HCO_IC_005007009.

11

 In April 2017, Teva pressed the American Academy of Neurology (AAN) not to criticize
the price of Copaxone during an upcoming AAN webinar on drug pricing and other policy
priorities. Prior to the webinar, a Teva executive spoke with AAN’s corporate relations
department and “expressed our [Teva’s] displeasure that Copaxone was the only MS drug
mentioned in their policy paper on drug pricing.” After watching the webinar, the executive
reported to his colleagues that “Copaxone was not mentioned during today’s webinar.” 43
V.

PROFIT-DRIVEN PATIENT SUPPORT PROGRAMS

In recent years, Teva has responded to criticism about the price of Copaxone by citing its
patient assistance programs. 44 These programs consist primarily of three separate initiatives:
•

43

“Copaxone Co-Pay Solutions,” which covers the co-pays of Copaxone patients
with commercial insurance; 45

TEVA_HCO_IC_005039313.

44

See, e.g., TEVA_HCO_IC_005000887 (Oct. 2016 talking points instructing Teva executives to pivot to
Teva’s “Copaxone Co-Pay Solutions” and other Shared Solutions services if asked “How can you justify the price
escalation of Copaxone over the last decade?”); Letter from Debra Barrett, Senior Vice President of Global
Government Affairs and Public Policy, Teva Pharmaceuticals, to Ranking Member Elijah E. Cummings, Committee
on Oversight and Government Reform (Oct. 6, 2017) (emphasizing patient programs in response to previous
Congressional inquiry).
45

See Teva Neuroscience Inc., Teva’s Shared Solutions for Copaxone (online at
www.copaxone.com/shared-solutions) (accessed Sept. 28, 2020).

12

 •

Cash donations to third-party foundations that pay the out-of-pocket costs of
Medicare beneficiaries; 46 and

•

Patient services, including injection training. 47

In contrast to Teva’s public claims that its programs justify its price increases, the
Committee’s investigation revealed that Teva profited greatly from increased sales due to these
same programs.
A.

Commercial Co-Pay Program

Teva’s internal strategy documents frequently emphasize the rate of return of its
commercial co-pay program. For example, Teva’s 2008 Copaxone Work Plan estimated that the
company would spend approximately $70 million on “Private Insurance Financial Assistance”
between 2008 and 2011 and that this expenditure would result in the sale of 198,930 units of
Copaxone that otherwise would have been lost. 48 Assuming a list price of $1,886 per unit (the
price of Copaxone on the date of the presentation), these sales were worth $373,484,580—a
433% return on investment. 49
The 2008 Work Plan’s estimate proved conservative. Its Workplan for 2012 to 2014
reported that Teva’s co-pay program had an average return on investment of 451% for
commercial patients. 50

46

See TEVA_HCO_IC_005095143 (Jan. 17, 2017, email and attachments documenting $38 million in total
“2017 Copaxone donations” to HealthWell Foundation’s MS Medicare Access Fund, PAN Foundation’s “MS
Fund,” and The Assistance Fund’s “MS Copay Assistance Program”); see also Exhibit 1 to Complaint, United
States v. Teva Pharmaceuticals USA, Inc., No. 20-11548 (D. Mass. Aug. 18, 2020) (online at www.justice.gov/usaoma/press-release/file/1305491/download) (showing $328,632,000 in payments to two foundations between 2006 and
2015).
47
See Teva Neuroscience Inc., Teva’s Shared Solutions for Copaxone (online at
www.copaxone.com/shared-solutions) (accessed Sept. 28, 2020).
48

TEVA_HCO_IC_005141925, at Slide 37. To arrive at this calculation, Committee staff totaled the
“Cost” and “Units Not Lost” figures for “Private Insurance Financial Assistance” from 2008 to 2011.
49

Id.; IBM Micromedex Redbook, Wholesale Acquisition Cost and Average Wholesale Price History for
Copaxone. Committee staff used list price here because Teva did not provide the Committee with Copaxone’s net
price per unit for 2008. But the $1,886 list price used in this analysis is significantly lower than the drug’s net price
in 2009-2011, making the analysis conservative.
50

TEVA_HCO_IC_005142081, at Slide 27. The presentation was careful to note that “Medicare D grants
are not included in the assessment.”

13

 In the years that followed, Teva continued to profit from its investments in commercial
co-pay programs. Internal strategy documents indicate that Teva collected $257.5 million in net
revenue from its $54.6 million in expenditures on the commercial co-pay programs in 2014. 51
Teva collected $148.2 million in net revenue from its $68.4 million in expenditures on the
programs in 2015. 52
A 2017 strategy presentation explained that the commercial co-pay programs benefited
Teva’s sales by ensuring that patients stayed on Copaxone over time. Teva estimated that a
patient on the program was 15% more likely to stay on the drug for 12 months than a patient that
was not on the program.
B.

Donations to Third-Party Foundations

51

TEVA_HCO_IC_005083616, at Slide 11. To arrive at this calculation, Committee staff totaled the
expenditures and net sales figures for “Commercial Co-Pay (PAP)” and “Coupon (CCS)” (which stands for
Commercial Co-Pay Solutions), which were Teva’s two commercial co-pay programs at the time.
52

TEVA_HCO_IC_005083616, at Slide 16. To arrive at this calculation, Committee staff totaled the
expenditures and net sales figures for “Commercial Co-Pay (PAP)” and “Coupon (CCS)” (which stands for
Commercial Co-Pay Solutions), which were Teva’s two commercial co-pay programs at the time.

14

 The federal Anti-Kickback Statute prohibits pharmaceutical manufacturers from
subsidizing the co-pay and other cost-sharing obligations incurred by Medicare Part D patients. 53
Manufacturers are permitted to make donations to “independent, bona fide charitable assistance
programs” when appropriate safeguards exist. 54 According to the Office of Inspector General
(OIG) of the Department of Health and Human Services (HHS): “Simply put, the independent
charity PAP [patient assistance program] must not function as a conduit for payments by the
pharmaceutical manufacturer to patients and must not impermissibly influence beneficiaries drug
choices.” 55
The documents reviewed by the Committee indicate that Teva’s donations to third-party
foundations were made as an “investment” for future returns, with the expectation that such
donations would drive Copaxone sales. 56 For example, Teva’s 2008 Copaxone Work Plan
estimated that the company would spend approximately $97 million on “Medicare Financial
Assistance” between 2008 and 2011 and that this expenditure would result in the sale of an
additional 155,113 units of Copaxone that were “incremental” or “not lost.” 57 Assuming a list
price of $1,886 per unit (the price of Copaxone on the date of the presentation), these Part D
sales were worth $292,543,118—a 200% return on investment. 58
Teva’s 2008 Copaxone Work Plan estimated that Teva would lose $11.4 million in sales
if it reduced its “investment” in “Medicare Part D Grants” by $4.3 million. Similarly, the Work
Plan estimated that Copaxone net sales would decline by $16 million in 2009, $33 million in
2010, and $45 million in 2011 if Teva were to “eliminate Medicare PAP Investment.” 59

53

See 42 U.S.C. § 1320a-7b(b); Department of Health and Human Services, Office of Inspector General,
Special Advisory Bulletin: Patient Assistance Programs for Medicare Part D Enrollees, 70 Fed. Reg. 70623 (Nov.
22, 2005) (online at www.govinfo.gov/content/pkg/FR-2005-11-22/pdf/05-23038.pdf); Department of Health and
Human Services, Office of Inspector General, Supplemental Special Advisory Bulletin: Independent Charity Patient
Assistance Programs, 79 Fed. Reg. 31120 (May 30, 2014) (online at
https://oig.hhs.gov/fraud/docs/alertsandbulletins/2014/independent-charity-bulletin.pdf).
54

Department of Health and Human Services, Office of Inspector General, Special Advisory Bulletin on
Patient Assistance Programs for Medicare Part D Enrollees, 70 Fed. Reg. 70623 (Nov. 22, 2005) (online at
www.govinfo.gov/content/pkg/FR-2005-11-22/pdf/05-23038.pdf).
55

Id.

56

TEVA_HCO_IC_005141925, at Slide 50.

57

TEVA_HCO_IC_005141925, at Slide 37. To arrive at this calculation, Committee staff totaled the
“Incremental Units,” “Units Not Lost,” and “Cost” figures for “Medicare Financial Assistance” from 2008 to 2011.
58

Id.; IBM Micromedex Redbook, Wholesale Acquisition Cost and Average Wholesale Price History for
Copaxone. Committee staff used list price here because Teva did not provide the Committee with Copaxone’s net
price per unit for 2008. But the $1886 list price used in this analysis is significantly lower than the drug’s net price
in 2009-2011, making the analysis conservative.
59

TEVA_HCO_IC_005141925, at Slide 46, 50. At Teva’s request, Committee staff agreed to redact nonrelevant information.

15

 A September 23, 2015, email reveals that Teva’s most senior executives were required to
approve large donations to the third-party foundations, such as the investments described above.
The email explains that after Teva received “a request for Copaxone donations from The
Assistance Fund” and determined the timing of the donation, it would need “written
documentation from the appropriate approval authority.” 60 The email lists the “Approval
Authority Levels” as:

Given the size of Teva’s donations to third-party foundations, this policy would have
required them to have been approved by the company’s Executive Committee, Chief Financial
Officer (CFO), or Chief Executive Officer (CEO). 61
60

TEVA_HCO_IC_005095970.

61

Id. Teva originally attempted to redact this portion of the email in its productions to the Committee.
Teva reversed course after the Department of Justice released a version of this email that was unredacted. See Letter

16

 On August 18, 2020, the Department of Justice (DOJ) filed a civil lawsuit against Teva
regarding its payments to third-party foundations. DOJ’s complaint alleged:
During the period from late 2006 through at least 2015, Teva knowingly and willfully
violated the anti-kickback statute, 42 U.S.C. § 1320a-7b(b), by paying over $300 million
to two third-party foundations, Chronic Disease Fund (“CDF”) and The Assistance Fund
(“TAF”), to cover the Medicare co-pay obligations of Copaxone patients. This conduct
generated hundreds of millions of dollars in false claims to Medicare and a corresponding
amount of revenue for Teva. 62
DOJ’s complaint also alleged:
Teva paid CDF and TAF tens of millions of dollars each year because it knew that the
foundations would use Teva’s money to cover Copaxone co-pays, thus increasing
Copaxone sales and enriching Teva in amounts that far exceeded its payments to the
foundations. 63
According to data attached to DOJ’s complaint, Teva paid a total of $328,632,000 to
CDF and TAF between December 2006 and December 2015. 64
Documents reviewed by the Committee indicate that Teva continued its payments to TAF
and other third-party foundations through at least 2018—three years beyond the scope of DOJ’s
complaint. These documents suggest that Teva’s donations continued to be based on the
expectation that they ultimately would be delivered to Copaxone patients.
In January 2016, executives sought approval for a $10 million “Copaxone Donation wire
transfer” to TAF. In seeking the approval, the executives emphasized that “this is a common
payment we make each year.” 65

from Kirkland and Ellis LLP, on behalf of Teva Pharmaceuticals Industries, Ltd., to Chairwoman Carolyn B.
Maloney, Committee on Oversight and Reform (Sept. 10, 2020).
62

Complaint, U.S. v. Teva Pharmaceuticals USA, Inc., No. 1:20-cv-11548 (D. Mass.) (Aug. 18, 2020)
(www.justice.gov/usao-ma/press-release/file/1305806/download).
63

Id.

64

Exhibit 1 to Complaint, U.S. v. Teva Pharmaceuticals USA, Inc., No. 1:20-cv-11548 (D. Mass.) (Aug.
18, 2020) (online at www.justice.gov/usao-ma/press-release/file/1305491/download) (showing $328,632,000 in
payments to two foundations between 2006 and 2015).
65

TEVA_HCO_IC_05293411.

17

 In October 2016, executives circulated a business plan that included a $40 million
“Medicare donation” as part of its Copaxone “marketing” strategy. 66

In January 2017, an executive sought approval for “3 payments totaling $38M related to
2017 Copaxone Donations.” 67 Attached to the email were three spreadsheets:
66

TEVA_HCO_IC_005036573, at Slide 28

67

TEVA_HCO_IC_005095143.

18

 •

A Payment Request Form to deliver $10 million to HealthWell Foundation, Inc.
for its “MS Medicare Access Fund;” 68

•

A Payment Request Form to deliver $13 million to the Patient Access Network
(PAN) Foundation for its “MS Fund;” 69 and

•

A Payment Request Form with the filename “Copaxone Donation wire transfer,”
which requested payment of $15 million to TAF for its “MS Copay Assistance
Program.” 70

Later in 2017, Teva Neuroscience requested an additional $5 million payment for the
PAN Foundation. In discussing whether to approve the request for funds, David Loughery,
Teva’s Vice President of Finance for North America Specialty Medicines (NASM), told NASM
President Larry Downey:
Considering how hard we’ve cut other areas, I would suggest we ask them [Teva
Neuroscience] to find other areas to cover this. I don’t doubt this makes sense but maybe
we need to reduce other areas that are less impactful. 71
Teva Neuroscience agreed to make future cuts to its fourth quarter 2017 budget to fund
the payment to PAN Foundation. 72 This decision indicates that Teva’s Vice President for
Finance viewed the payment to PAN Foundation as an “impactful” business investment, and
more impactful than other business expenses that it had.
As Teva began planning for 2018, early drafts of one of its strategic documents noted that
eliminating its “Medicare Donation” to third-party foundations would cost Teva up to $261
million in Copaxone sales. 73

68

TEVA_HCO_IC_005095144.

69

TEVA_HCO_IC_005095146

70

TEVA_HCO_IC_005095148.

71

TEVA_HCO_IC_005011650, at Slide 1.

72

TEVA_HCO_IC_005012554; TEVA_HCO_IC_005000898. It appears that the payment was delayed
until May 2017. See TEVA_HCO_IC_005095844.
73

TEVA_HCO_IC_005001347, at Slide 1. Committee staff accommodated Teva’s request that its Sales
Force expenditure be redacted.

19

 On August 30, 2017, Mr. Loughery told General Manager of Teva Neuroscience John
Hassler to remove the analysis from the presentation because he was “not comfortable including
the sales impact of the reduced donations.” 74

74

TEVA_HCO_IC_005001345.

20

 Documents and information reviewed by the Committee indicate that Teva continued
making donations to third-party foundations in 2018. Teva reported to the Committee that it
provided $23,286,429 in “charitable cash contributions in connection with Copaxone” in 2018. 75
At the beginning of 2018, Teva’s Executive Vice President for North America Brendan
O’Grady received a presentation on the company plan for the year. One slide emphasized:
27% of patients on Copaxone 40mg are Medicare Part D. Patients who are unable to
meet the donut hole deductible in Q1 may not fill Rx and go off therapy, which would
result in a negative impact to the brand of $210-280M. 76

In the speaker’s notes to that slide, Teva executives identified “Donations” as one of the
“High priority projects for execution.” 77

75

Letter from Kirkland and Ellis LLP, on behalf of Teva Pharmaceutical Industries, Ltd., to Chairman
Elijah E. Cummings, Committee on Oversight and Reform (May 24, 2019).
76

TEVA_HCO_IC_005028530, at Slide 5.

77

Id.

21

 A few weeks after receiving that presentation, Mr. O’Grady told a colleague that an
insurer’s decision to move Copaxone to the non-preferred tier of its formulary for both
commercial and Medicare patients “means little because we buy the patients [sic] copay down to
zero anyway.” 78
C.

Patient Services

Through its Shared Solutions program, Teva offers injection training and other
educational resources to Copaxone patients. Internal documents show that Teva also relied on
these services to drive additional Copaxone sales.
For example, Teva’s 2012-2014 workplan reported that its $29 million “investment” in
patient services in 2011 had “generated” $363 million in sales. The workplan emphasized that
this expenditure reflected a significant return on investment: “ROI of 1152%.” 79

78

TEVA_HCO_IC_005002063.

79

TEVA_HCO_IC_005142081, at Slide 27.

22

 Similarly, Teva executives estimated in 2017 that conducting an additional 1,200
injection trainings would cost the company $250,000, but “net $2.5M [million] in incremental
sales.” 80
Teva also uses its patient services to promote Copaxone over lower-priced generics. An
October 2017 presentation to Teva’s Board of Directors identified Teva’s Shared Solutions
services as “key activities to defend Copaxone Against Generic erosion.” 81

In 2017, Teva launched a Dispense As Written (DAW) campaign to convince doctors to
place a special notation on their prescriptions of Copaxone to prevent pharmacists from
substituting the brand name with a lower-priced generic equivalent. 82 (See Section VII below
for more information on Teva’s DAW strategy.) According to the presentation, Teva employees
used the Shared Solutions services to “contact all current 40mg patients with active marketing
authorization” and send “Emails to all patients with DAW messaging.” 83 An August 2018

80

TEVA_HCO_IC_005104023 (June 2017 email exchange regarding investments in Copaxone
marketing/support).
81

TEVA_HCO_IC_005021634, at Slide 4.

82

See, e.g., William H. Shrank, et al., The Consequences of Requesting “Dispense as Written,” American
Journal of Medicine (Apr. 2011) (online at
https://scholar.harvard.edu/files/nkc/files/2011_dispense_as_written_am_j_med.pdf).
83

TEVA_HCO_IC_005021634, at Slide 4.

23

 presentation emphasized the need to “reinforce DAW on every call” and use “Marketing driven
patient programs and telecons to supplement patient education/support.” 84
VI.

NEW DOSE AS “GENERIC DEFENSE STRATEGY”

In 2002, Teva’s senior executives began holding meetings on Copaxone “Life Cycle
Management,” an industry term for the use of incremental research to extend a profitable drug’s
market monopoly. 85 The executives later emphasized to Teva’s Board of Directors that one
objective of life cycle management was to “Minimize the risk of generic competition.” 86
Over the past decade, Teva’s research and development decisions have focused on
maximizing profits by shielding Copaxone from generic competition for as long as possible.
Teva’s primary strategy to extend the life cycle of Copaxone was to introduce a new formulation
of Copaxone—a 40 mg/ml dose injected three times per week. Teva publicly framed the new
dose as more convenient than the 20 mg/ml formulation, which is injected every day. 87 Internal
company documents, however, reveal that Teva developed Copaxone 40 mg/ml in part to extend
its monopoly pricing for Copaxone by shifting patients to the new dose—which still enjoyed
market exclusivity—before the existing 20 mg/ml dose began facing generic competition.
Teva introduced Copaxone 40 mg/ml in 2014. 88 Through this strategy, Teva was able to
shift many patients to the new dose before another pharmaceutical company, Sandoz, released
Glatopa, a lower-priced generic version of Copaxone 20 mg/ml, in 2015. Independent experts
estimate that Teva’s 40 mg/ml strategy cost the U.S. health care system between $4.3 billion and
$6.5 billion in additional health care expenditures. 89
A.

Launching Copaxone 40 mg to Extend Monopoly and Minimize Competition

Until 2008, Teva’s strategy to minimize generic competition for Copaxone centered on
introducing a daily dose of Copaxone 40 mg/ml, which it believed would be more effective than
generic versions of Copaxone 20 mg/ml. 90 In support of a daily version of Copaxone 40 mg/ml,
84

TEVA_HCO_IC_005126952, at Slide 10.

85

See TEVA_HCO_IC_005158339, at Pages18-21 (summary of 2002 meeting in Boca Raton, Florida);
TEVA_HCO_IC_05220331 (summary of 2002 meeting in Berlin, Germany).
86

TEVA_HCO_IC_005132388, at Slide 2.

87

Teva Pharmaceuticals, Ltd., Press Release: Teva Announces U.S. FDA Approval of Three-Times-a-Week
Copaxone (Glatiramer Acetate Injection) 40 mg/mL (Jan. 28, 2014) (online at
www.businesswire.com/news/home/20140128006747/en/Teva-Announces-U.S.-FDA-Approval-Three-Times-aWeek-COPAXONE%C2%AE).
88

Letter from Billy Dunn, Acting Director, Division of Neurology Products, Food and Drug
Administration, to Dennis Ahern, Senior Director for Regulatory Affairs, Teva Pharmaceuticals USA (Jan. 28,
2014) (online at www.accessdata.fda.gov/drugsatfda_docs/appletter/2014/020622Orig1s089ltr.pdf).
89

Benjamin N. Rome, et al., US Spending Associated with Transition from Daily to 3-Times-Weekly
Glatiramer Acetate, Journal of the American Medical Association Internal Medicine (July 20, 2020) (online at
https://jamanetwork.com/journals/jamainternalmedicine/article-abstract/2768653).
90

See National Institutes of Health, Information for Clinical Trial Identifier NCT00202982 (online at
https://clinicaltrials.gov/ct2/show/record/NCT00202982) (2003 Teva-sponsored Phase II study examining efficacy

24

 Teva sponsored the FORTE Trial, a Phase III clinical trial examining its efficacy, safety, and
tolerability as compared to daily Copaxone 20 mg/ml. 91 In July 2008, Teva announced that the
trial had found no difference in efficacy between the two doses of Copaxone. 92
Unable to market Copaxone 40 mg/ml as a more effective dose of Copaxone, Teva
shifted its strategy to selling Copaxone 40 mg/ml as an equally effective—but less frequent—
dose. Notably, Teva had previously rejected this strategy as less profitable. In January 2007,
one executive wrote:
The reason I’ve been given why less frequent dosing of a higher dose of glatiramer
should not even be considered is pricing: for the 40 mg once daily, one can not [sic]
double the price, let alone when 40 mg would be used less frequent dosing ie [sic] once a
week. Moreover, it has also been argued that some patients may use 20 mg less
frequently in case 40 mg will show an efficacy when used in less frequent dosing than
once daily and this will cut sales of 20mg. A counterargument in that case could be that
20 mg should no longer be available in the market. I of course do not suggest that such
arguments be exposed to external people. 93
Another executive had previously noted that Teva had “no data to support similar / better
efficacy of GA [Copaxone] 40mg in every other day administration.” The executive also
emphasized that “every other day over once daily does not represent a significant improvement
in convenience” and that “GA 40 mg every other day will result in price reduction by half, being
much lower than GA 20mg!!” 94
After the FORTE Trial failed, Teva began reexamining whether it could combat generic
competition through the launch of Copaxone 40 mg/ml injected three times per week. Within
weeks of announcing the FORTE Trial’s results, Teva’s executives presented new Copaxone
“Life Cycle Initiatives” to the company’s Board of Directors, including “40 mg every other
day.” 95

of Copaxone 40 mg/ml); TEVA_HCO_IC_05210570 (Aug. 2007 presentation to Board of Directors on daily
Copaxone 40 mg/ml); TEVA_HCO_IC_05253089 (Jan. 2008 strategy document on pricing for daily Copaxone 40
mg/ml if Phase III clinical trial was successful).
91

See National Institutes of Health, Information on Clinical Trial Identifier NCT00337779 (online at
https://clinicaltrials.gov/ct2/show/NCT00337779).
92

Teva Pharmaceuticals, Ltd., Press Release: Teva Provides Update on FORTE Trial (July 7, 2008)
(online at https://ir.tevapharm.com/news-and-events/press-releases/press-release-details/2008/Teva-ProvidesUpdate-on-FORTE-Trial/default.aspx).
93

TEVA_HCO_IC_005152181.

94

TEVA_HCO_IC_005152124.

95

TEVA_HCO_IC_005235121, at Slide 6.

25

 In August 2008, the executives also began asking whether Teva could “patent the
frequency” of injections, thereby limiting the ability of generic competitors to introduce a similar
generic version of the drug. 96

By December 2008, Teva’s business executives had decided to pursue research
supporting a Copaxone dose of three times per week. Many of Teva’s scientists opposed this
decision. One scientist wrote that Teva’s Innovative Research and Development (IR&D)

96

TEVA_HCO_IC_005132452.

26

 management was “strongly against” Teva’s study into the less-frequent dosing of Copaxone
“since it has no scientific rationale/value”: 97

In June 2009, Teva’s executives prepared a presentation on “Copaxone LCM—Mid Term
Initiatives” for then-CEO Shlomo Yanai. The presentation stressed the need to “Develop a low
frequency formulation of GA” to ensure “the competitiveness of Copaxone in the future and
address the market [sic] unmet need for less frequent injections.” 98

97

TEVA_HCO_IC_005233185.

98

TEVA_HCO_IC_005159378, at Slide 2.

27

 The presentation acknowledged that, at that time, there was “No supporting clinical data
for the selected dose or dosing regimen.” The presentation also suggested that the strategy
would be more profitable in the United States than in Europe because Teva would get “No
market exclusivity in Europe.” 99

Internal discussions in November 2009 undermine Teva’s claims that it launched the 40
mg/ml three times per week to benefit patients and not to protect the Copaxone franchise. That
month, Teva decided against doing research on the efficacy of administering Copaxone 40
mg/ml once per week—which presumably would have been even more convenient for patients.
Teva’s then-CEO Shlomo Yanai feared that such research would lead patients to take two
injections of a cheaper generic version of Copaxone 20 mg/ml once per week rather than Teva’s
Copaxone 40 mg/ml. 100
In 2010, Teva sponsored the GALA Trial, a Phase III trial examining the efficacy of
Copaxone 40 mg/ml administered three times per week. 101 As it awaited the results of the trial,
Teva continued assessing the business strengths of the new dose. Teva’s marketing team
circulated a draft analysis noting that the new formulation of Copaxone would provide a “Patent
99

Id. at Slide 5; see also TEVA_HCO_IC_005151509 (similar presentation for Teva’s Chief Executive

Officer).
100

TEVA_HCO_IC_005151470 (“As you stated Shlomo does not support this for fear of a follow on GA
[i.e. generic Copaxone] being used 20 mg two shots, once a week (BIW).”).
101

See National Institutes of Health, Information on Clinical Trial Identifier NCT01067521 (online at
https://clinicaltrials.gov/ct2/show/study/NCT01067521).

28

 protection extension” in addition to “better convenience, compliance, adherence, resulting in
theoretical better QoL [quality of life].” The team emphasized that the new dose would be a
“Barrier to Generic entrance.” Given Teva’s status as the largest generic manufacturer in the
world, a more senior executive suggested that the team replace the words “Barrier to Generic
entrance” with “extension of Life Cycle” noting, “we don’t want to be seen as ‘creating’ barriers
to generics as this is Teva’s core business.” 102

The analysis also acknowledged that the new dose provided “No major advantage on GA
20 mg.” 103
After the GALA Trial demonstrated that Copaxone 40 mg/ml three times per week was
safe and effective, Teva sought approval from the Food and Drug Administration (FDA) to

102

TEVA_HCO_IC_05239258, at Slide 4.

103

Id. at Slide 3.

29

 market the new dose. FDA granted Teva’s application on January 28, 2014. 104 Teva launched
the drug the next day. 105
B.

Price Increases, Contracting, and Marketing to Pressure Patients to Switch

Teva launched Copaxone 40 mg/ml nearly 18 months before Sandoz launched Glatopa, a
lower-priced generic competitor to Copaxone 20 mg/ml.106 During the intervening period, Teva
implemented a comprehensive “generic defense strategy” to switch patients to Copaxone 40
mg/ml and avoid generic competition. 107
To incentivize patients and payers to make the switch, Teva set a launch price for
Copaxone 40 mg/ml that was slightly less expensive per week of treatment than Copaxone 20
mg/ml. Teva’s internal documents indicate that this decision was a tactic to minimize future
generic competition rather than to reduce costs for patients. In its memorandum approving the
decision, Teva’s pricing committee emphasized: “We want rapid transition of COPAXONE
20mg to 40mg prior to expected generics in mid-2014.” 108
To further encourage patients to switch from Copaxone 20 mg/ml to Copaxone 40 mg/ml,
Teva also increased the price of Copaxone 20 mg/ml by 9.8% on August 22, 2014. 109 This price
increase was part of Teva’s 2014 strategic plan, which emphasized that one method to “Divert to
40” was to “raise 20mg price.” 110 Some Teva executives advocated for the price increase to
happen earlier. One wrote:
Just for clarity … an important part of our generic defense strategy is creating price
separation between 20mg and 40mg. We can do that via increased discounts on 40mg or
raising the price on 20mg. I prefer the latter. Delaying a pricing action to mid-August or
later, impedes our ability to gain access for 40mg with resistant payers, [sic] makes a
generic more appealing to payers, and could dampen further conversion strategies. 111
In addition to increasing the price of Copaxone 20 mg/ml, Teva explored a plan to
“Discontinue 20mg Financial Programs (Patient Services)”—its financial assistance program for
104

Letter from Billy Dunn, Acting Director, Division of Neurology Products, Food and Drug
Administration, to Dennis Ahern, Teva Pharmaceuticals USA (Jan. 28, 2014) (online at
www.accessdata.fda.gov/drugsatfda_docs/appletter/2014/020622Orig1s089ltr.pdf).
105

IBM Micromedex Redbook, Wholesale Acquisition Cost and Average Wholesale Price History for

Copaxone.
106

Id.; Sandoz, Press Release: Sandoz Announces U.S. Launch of Glatopa, the First Generic Competitor
to Copaxone 20 mg (June 19, 2015) (online at www.us.sandoz.com/news/media-releases/sandoz-announces-uslaunch-glatopatm-first-generic-competitor-copaxoner-20mg).
107

TEVA_HCO_IC_005147355.

108

TEVA_HCO_IC_005135778, at Page 5.

109

IBM Micromedex Redbook, Wholesale Acquisition Cost and Average Wholesale Price History for

Copaxone.
110

TEVA_HCO_IC_005134707, at Page 13.

111

TEVA_HCO_IC_005147355 (ellipses in original).

30

 patients—which would make it more expensive for patients to remain on the lower dose of the
medication. 112

Documents show that Teva exerted pressure on pharmacy benefit managers (PBMs) by
tying contractual rebates on Copaxone 20 mg/ml—the discounts provided to PBMs that are
primarily passed on to insurance plans to reduce premiums—to adding Copaxone 40 mg/ml to
their formularies. 113 For example, Teva’s internal emails suggest that on PBM forfeited its 2015
rebates on Copaxone 20 mg/ml because it declined to add Copaxone 40 mg/ml to is formulary. 114
This pressure campaign was successful. The PBM added 40 mg/ml to its formulary the next
year. 115

112

TEVA_HCO_IC_005141157, at Slide 41.

113

TEVA_HCO_IC_005006452; Department of Health and Human Services, Office of Inspector General,
Rebates for Brand Name Drugs in Part D Substantially Reduced the Growth in Spending from 2011 to 2015 (Sept.
2019) (online at https://oig.hhs.gov/oei/reports/oei-03-19-00010.pdf).
114

TEVA_HCO_IC_005006452.

115

Id.

31

 Teva incentivized other PBMs to lobby doctors on behalf of Copaxone 40 mg/ml. For
example, after generic Glatopa entered the market, Teva contracted with Humana to implement a
“Copaxone conversion initiative.” Teva internally described the arrangement as follows:
Humana is committed to converting current Copaxone 20mg patients over to Copaxone
40mg with their physician members. Specifically, Humana is contacting the prescribers
via fax and phone to make them aware of which patients are still on Copaxone 20mg and
encourage them to switch these patients to Copaxone 40mg. Should a prescriber choose
not to switch, the patient would simply remain on Copaxone 20mg. 116
Teva also incentivized its sales force to convert patients to Copaxone 40 mg/ml by
making their bonuses entirely dependent on 40 mg/ml sales. 117
Finally, Teva executed a marketing campaign to encourage patients and physicians to
switch to 40 mg/ml Copaxone. Teva’s 2014 strategic plan included telling patients that
switching to Copaxone 40 mg/ml would give them the “Freedom to … Be Bold. Be True. Be
You. It’s your future.” 118
The company targeted doctors through its sales force. Teva’s “Brand Plan” for 2017
identified the following “Behavioral Objectives” for physicians:
•

“Encourage physicians to initiate and upgrade any remaining patients to TIW
[three times weekly] Copaxone 40mg”;

•

“Encourage physicians to switch patients to TIW Copaxone 40mg if payers force
to generic GA for daily dose”;

•

“Prescribe Copaxone DAW [Dispense as Written] for new and existing patients”;
and

•

“Encourage their patients to accept only branded Copaxone.” 119

116

TEVA_HCO_IC_005006534; see also TEVA_HCO_IC_005141157, at Slide 43.

117
Id.; TEVA_HCO_IC_005001181,at Page 1 (“The sales force is only paid on 40mg sales.”); see also
TEVA_HCO_IC_005028494 (Jan. 2018 presentation suggesting that Teva continued to structure its sales
representatives’ bonuses to drive “transition from Copaxone 20 mg to 40mg while protecting total Copaxone
share”).
118

TEVA_HCO_IC_005134707, at Page 15 (ellipses in original).

119

TEVA_HCO_IC_005102935, at Page 10.

32

 C.

Strategy Successfully Maintained High Prices

The introduction of Copaxone 40 mg/ml successfully increased Teva’s market share and
profits despite the launch of Glatopa, Sandoz’s lower-priced generic version of Copaxone, in
June 2015.
In December 2015, then-CEO Erez Vigodman boasted that Teva had successfully
converted 76.9% of Copaxone patients to 40 mg/ml and had limited “Glatopa 20mg Market
Share” to 19.3%. 120 In June 2016—nearly one year after Glatopa entered the market—General
Manager of Teva Neuroscience John Hassler circulated a presentation which boasted in the
speaker’s notes: “The strategy of switching patients to 40mg version of the medicine is

120

TEVA_HCO_IC_005188452, at Slide 15.

33

 continuing to be successful and reduce [sic] the impact of generic competition.” 121 An outside
consultant to Teva agreed with the assessment, writing:
Prior to Glatopa’s launch, Teva released and promoted a long-acting Copaxone 40MG,
effectively pushing existing and new patients to the branded 40MG and minimizing
generic substitution. 122

By shifting patients to Copaxone 40 mg/ml, Teva reduced its rebate obligations to health
insurance plans. Teva’s internal data show that in every year since 2014, the average negotiated
payer discount to commercial and Medicare Part D plans for Copaxone 40 mg/ml was lower than
Copaxone 20 mg/ml—with the difference in the commercial channel exceeding 10% in some
years. 123
Teva also avoided paying millions in rebates to Medicaid by shifting of patients to
Copaxone 40 mg/ml. According to data Teva produced to the Committee, between 2014 and
121

TEVA_HCO_IC_005018280, at Slide 1.

122

TEVA_HCO_IC_005045517, at Slide 2.

123

Letter from Kirkland and Ellis LLP, on behalf of Teva Pharmaceuticals Industries, Ltd., to Chairwoman
Carolyn B. Maloney, Committee on Oversight and Reform (Sept. 25, 2020).

34

 2018, Teva paid Medicaid rebates for Copaxone 20 mg/ml equal to nearly 100% of its list price,
due to the inflationary rebates that manufacturers are required to pay when they raise prices. 124
Over the same period, Teva paid Medicaid rebates for Copaxone 40 mg/ml equal to between
23% and 68% of its list price because it was a new product that had not yet increased in price. 125
Shifting a patient from Copaxone 20 mg/ml to 40 mg/ml allowed Teva to collect from Medicaid
between $1,852 and $3,569 in additional net revenue, per patient per month. 126
Teva’s internal documents support this conclusion. A September 2015 presentation
calculated, “For each unit of Cop 20 converted to Cop 40, Teva saves $3180 in rebate.” 127
Similarly, in November 2016, a Teva executive estimated that Teva pays a 100% rebate to
Medicaid for Copaxone 20 mg/ml but nets “$2500 on 40mg after rebates.” 128
By shifting patients from Copaxone 20 mg/ml to 40 mg/ml, Teva maintained more than
$3 billion in annual net revenue from 2015 to 2017, despite competition from Sandoz’s 20 mg/ml
Glatopa. 129 Researchers at Harvard University estimate that Teva’s strategy of shifting patients
from Copaxone 20 mg/ml to Copaxone 40 mg/ml prior to generic entry created a 2.5 year delay
in generic completion and cost the U.S. health care system between $4.3 and $6.5 billion in
excess expenditures. 130
VII.

EXCLUSIONARY TACTICS TO LIMIT GENERIC COMPETITION

Documents reviewed by the Committee indicate that Teva implemented several new
exclusionary tactics aimed at limiting generic competition and maintaining profits. A
presentation to Teva’s Board of Directors identified three “Key Activities to Defend Against
Generic Erosion.” 131 First, Teva contracted with specialty pharmacies and PBMs to limit generic
substitution. Second, Teva lobbied doctors to write prescriptions for Copaxone that prohibited
generic substitution. Third, Teva used its patient programs to convince patients to remain on the
more expensive brand name version of the drug (see Section V above for more information
regarding patient programs). 132

124

TEVA_HCO_IC_005012834

125

Id.

126

Id.

127

TEVA_HCO_IC_005053396.

128

TEVA_HCO_IC_005117117.

129

Letter from Kirkland and Ellis LLP, on behalf of Teva Pharmaceuticals Industries, Ltd., to Chairman
Elijah E. Cummings, Committee on Oversight and Reform (July 18, 2019).
130

Benjamin N. Rome, et al., US Spending Associated with Transition from Daily to 3-Times-Weekly
Glatiramer Acetate, Journal of the American Medical Association Internal Medicine (July 20, 2020) (online at
https://jamanetwork.com/journals/jamainternalmedicine/article-abstract/2768653).
131

TEVA_HCO_IC_005021634, at Slide 4.

132

Id.

35

 Through these tactics, Teva successfully defended Copaxone 40 mg/ml’s market share.
Nearly two years after Mylan began selling a generic version of Copaxone 40 mg/ml in October
2017, and after Sandoz followed suit by introducing Glatopa in February 2018, Teva reported
that it maintained 63% of the market despite Copaxone having a higher list price than its generic
alternatives. 133
A.

“House Brand” Contracting Strategy

Teva responded to generic entry by implementing a “House Brand Strategy” to contract
with—and pay rebates to—PBMs and specialty pharmacies to make Copaxone 40 mg/ml the
only version of the drug covered or dispensed. 134 A January 2017 document titled “At-Risk Gx
[Generic] Readiness” explained that the strategy would prevent a patient’s insurance plan from
covering a generic alternative to Copaxone and prevent a specialty pharmacy from dispensing
the generic:
•

“2 of the House Brand target accounts will be executed at the formulary level.
Blocking the generic via formulary restriction”; and

133

Teva Pharmaceuticals Industries, Ltd., Third Quarter 2019 Results (Nov. 7, 2019) (online at
https://s24.q4cdn.com/720828402/files/doc_presentations/Teva_Q3-2019_Earnings-Presentation_FINAL.pdf).
134

It is Committee staff’s understanding that such contracts required the pharmacy to ensure that patients
and health plans are left in the same position as if the prescription had been filled with the generic. See, e.g.,
TEVA_HCO_IC_005119478 (February 2018 contract with a specialty pharmacy).

36

 •

“2 of the House Brand target accounts will be executed at the specialty pharmacy
level. Pharmacy will fill brand regardless if prescribed as generic.” 135

When Mylan received FDA approval on October 3, 2017, to bring its generic version of
Copaxone to market, Teva immediately began executing the House Brand Strategy. On October
26, 2017, General Manager of Teva Neuroscience John Hassler notified Teva CEO Kåre Schultz:
“Two weeks post generic approval, the team has had early success in achieving key Brand Over
Generic goals,” and “45% of units have been targeted via House Brand Agreements.” 136
In a series of emails in January 2018, Teva’s Executive Vice President for North
America, Brendan O’Grady, explained how Teva’s House Brand agreement with a specialty
pharmacy was successfully preventing generic competition. An employee asked Mr. O’Grady
whether Teva’s position would be harmed by a health insurer decision to place Copaxone 40
mg/ml on more restrictive tiers on commercial and Medicare Part D formularies, in favor of
generic alternatives. Mr. O’Grady responded that the insurer’s decision had “almost zero impact
on actual prescriptions.” At the time, the insurer’s patients accessed Copaxone through a

135

TEVA_HCO_IC_005035591, at Slide 11.

136

TEVA_HCO_IC_005001334.

37

 specialty pharmacy, which is wholly owned by a pharmacy benefit manager. According to Mr.
O’Grady:
Because [PBM] is getting an additional rebate to fill all ‘glatiramer’ or Copaxone scripts
with Copaxone … if a doctor orders generic glatiramer or the pharmacy benefit mandates
it be filled as a generic, it will come in a plain box with Copaxone inside. Win-win for
all 137

Earlier in the email, a Teva executive had warned subordinates that the contract with
[specialty pharmacy] should “not be formally shared with the sales team” because of the
“confidential nature of the [specialty pharmacy] House Brand strategy.” 138

137
TEVA_HCO_IC_005002063 (ellipses in original). Committee staff accommodated Teva’s request for
redactions of the specific PBM, specialty pharmacy, or payor in the email.
138

Id.

38

 By April 2018, Teva had entered into House Brand Agreements with a number of PBMs
for Medicare and commercial patients. Some of these agreements blocked generics from
formularies while others replaced generics at the specialty pharmacy. 139
B.

“Dispense as Written” Campaign

Pharmacists are permitted to substitute brand-name drugs with lower-cost generic
versions if patients consent. 140 However, doctors can prohibit substitutions by writing “Dispense
as Written” (DAW) on prescriptions. 141 In response to the introduction of generics, Teva lobbied
doctors to write DAW on prescriptions of Copaxone to prevent generic substitution. Teva’s
DAW campaign limited generic market share, despite their lower prices.
Teva’s strategy documents identified the DAW campaign as a key tactic to limiting
generic competition. In the months leading up to Mylan’s 40 mg/ml generic entering the market,
Teva began encouraging physicians to: “Prescribe Copaxone DAW for new and existing
patients.” 142 Teva also leveraged its patient support program, “Shared Solutions,” to push the
DAW campaign on patients. According to an internal analysis in August 2017, DAW was
written on 87% of Copaxone 40 mg/ml prescriptions requested through Teva’s “Shared Solutions
Copaxone Prescription Service Request Form.” 143
139

TEVA_HCO_IC_005007799, at Slides 2-3.

140

Yan Song and Douglas Barthold, The Effects of State-Level Pharmacist Regulations on Generic
Substitution of Prescription Drugs, Health Economics (Nov. 2018) (online at
ncbi.nlm.nih.gov/pmc/articles/PMC6172151/pdf/nihms975944.pdf) (summarizing state generic substitution laws).
141

William H. Shrank, et al., The Consequences of Requesting “Dispense as Written,” American Journal of
Medicine (Apr. 2011) (online at
https://scholar.harvard.edu/files/nkc/files/2011_dispense_as_written_am_j_med.pdf).
142

TEVA_HCO_IC_005102935, at Page 10.

143

TEVA_HCO_IC_005002781.

39

 When Mylan’s generic entered the market in October 2017, Teva intensified its DAW
campaign. In a presentation to Teva’s Board of Directors, executives emphasized that they
would engage in “Outbound efforts to 40mg patients through Shared Solutions,” including
sending “Emails to all patients with DAW messaging.” The executives also touted their “Ability
to produce current 40mg patient lists for HCP [Health Care Professional] offices” to
“proactively” write DAW on prescriptions. 144
Teva’s DAW campaign changed doctors’ prescribing patterns. By February 2018, 77%
of Copaxone prescriptions were written with the “DAW” notation. 145

In August 2018, Executive Vice President for North America Brendan O’Grady
congratulated his team on the success of the DAW strategy:
Keep up pressure on Copaxone and maximize office calls up to the launch of [Another
Teva Product]. The DAW campaign combined with the legacy and house brand access
strategy has paid great dividends. I want to exceed $1.5b for the year on Copaxone. We
did $900m in H1 so we only need to do $500m+ in H2 to accomplish this goal. 146

144

TEVA_HCO_IC_005021634.

145

TEVA_HCO_IC_005007799, at Slide 4.

146

TEVA_HCO_IC_005127231.

40

 Teva achieved Mr. O’Grady’s goal. In 2018, the company collected $1.6 billion in net
revenue for Copaxone despite competition from generics. 147
VIII. COSTS DO NOT JUSTIFY PRICE OF COPAXONE
A.

Rebates and Manufacturing

The pharmaceutical industry often attributes price increases to rebates, discounts, and
other fees provided to PBMs and other third parties within the distribution chain. 148 Teva’s
internal data, however, suggest that its decades of price increases for Copaxone cannot be
attributed to growing rebates or discounts provided to PBMs, pharmacies, health insurance plans,
employers, or other payers.
The average net price per unit of Copaxone—the amount of money the company makes
on the drug after all rebates—increased for both the 20 mg/ml and 40 mg/ml doses of Copaxone
from 2009 to 2017. This rise ended only after Mylan introduced its 20 mg/ml and 40 mg/ml
generics. 149

147

Letter from Kirkland and Ellis LLP, on behalf of Teva Pharmaceuticals Industries, Ltd., to Chairman
Elijah E. Cummings, Committee on Oversight and Reform (July 18, 2019).
148

See Pharmaceutical Research and Manufacturers of America, Let’s Talk About Cost (online at
www.letstalkaboutcost.org/).
149

Letter from Kirkland and Ellis LLP, on behalf of Teva Pharmaceuticals Industries, Ltd., to Chairwoman
Carolyn B. Maloney, Committee on Oversight and Reform (Aug. 25, 2020); Letter from Kirkland and Ellis LLP, on
behalf of Teva Pharmaceuticals Industries, Ltd., to Chairman Elijah E. Cummings, Committee on Oversight and
Reform (July 18, 2019).

41

 Figure 7 below shows the average net price per unit for Copaxone between 2009 and
2019.
Figure 7: Net Price Per Unit Increased Until Generic Entry 150

Teva cannot attribute its price increases for Copaxone to the cost of manufacturing the
drug. According to internal data, Teva’s cost of goods sold for Copaxone is miniscule—between
0.5% and 3% of the net price of the drug. 151 From 2013 to 2018, Teva’s costs to manufacture
Copaxone declined significantly while Teva increased the list price of Copaxone 20 mg/ml by
$2,053 per month and the list price of Copaxone 40 mg/ml increased by $1,190 per month. 152
B.

Research and Development

Teva has attempted to defend its Copaxone price increases by claiming that they are
needed to fund future research and development (R&D). For example, in October 2016, Teva
150

Letter from Kirkland and Ellis LLP, on behalf of Teva Pharmaceuticals Industries, Ltd., to Chairwoman
Carolyn B. Maloney, Committee on Oversight and Reform (Aug. 25, 2020).
151

Letter from Kirkland and Ellis LLP, on behalf of Teva Pharmaceuticals Industries, Ltd., to Chairman
Elijah E. Cummings, Committee on Oversight and Reform (July. 18, 2019); Letter from Kirkland and Ellis LLP, on
behalf of Teva Pharmaceuticals Industries, Ltd., to Chairman Elijah E. Cummings, Committee on Oversight and
Reform (Aug. 9, 2019).
152

IBM Micromedex Redbook, Wholesale Acquisition Cost and Average Wholesale Price History for
Copaxone. Letter from Kirkland and Ellis LLP, on behalf of Teva Pharmaceuticals Industries, Ltd., to Chairman
Elijah E. Cummings, Committee on Oversight and Reform (Aug. 9, 2019).

42

 developed talking points directing executives to emphasize that the price of Copaxone “reflects
the clinical utility of the drug, while maintaining [Teva’s] commitment to ongoing clinical
research.” The talking points instructed executives to argue that Teva’s prices increases are
justified because the company continues “to invest in researching new developments that directly
translate to increased options for Copaxone patients.” 153
Contrary to Teva’s talking points, the company was unable to identify any R&D
expenditures related to Copaxone after 2015. 154 In fact, internal data show that Teva invested
only a small portion of its Copaxone revenue in further R&D to help Copaxone patients.
Figure 8 below reflects Teva’s total R&D expenditures for Copaxone compared to its net
U.S. revenue for the drug. Teva identified a total of $689 million R&D expenditures related to
Copaxone since 1987—only 2% of its $34.2 billion in net U.S. revenue of Copaxone from 2002
to 2019. 155

153

Bates No. TEVA_HCO_IC_005000887, at Page 5.

154
Letter from Kirkland and Ellis LLP, on behalf of Teva Pharmaceuticals Industries, Ltd., to Chairman
Elijah E. Cummings, Committee on Oversight and Reform (Aug. 9, 2019); Letter from Kirkland and Ellis LLP, on
behalf of Teva Pharmaceuticals Industries, Ltd., to Chairwoman Carolyn B. Maloney, Committee on Oversight and
Reform (Aug. 25, 2020) (“Teva is writing to confirm that it had no additional Copaxone research and development
expenditures other than those identified in our prior letter.”).
155

Letter from Kirkland and Ellis LLP, on behalf of Teva Pharmaceuticals Industries, Ltd., to Chairman
Elijah E. Cummings, Committee on Oversight and Reform (Aug. 9, 2019); Letter from Kirkland and Ellis LLP, on
behalf of Teva Pharmaceuticals Industries, Ltd., to Chairman Elijah E. Cummings, Committee on Oversight and
Reform (July 18, 2019); Teva Pharmaceuticals Industries, Ltd., Annual Reports (Forms 10-K or 20-F) 2002-2019
(online at https://ir.tevapharm.com/financials/sec-filings/default.aspx).

43

 Figure 8

A 2016 internal presentation to the Science and Technology Committee of Teva’s Board of
Directors confirmed that Teva spent the least on R&D among all major pharmaceutical
companies. 156

156

TEVA_HCO_IC_005178747, at Slide 3.

44

 IX.

CONCLUSION

Teva’s price increases and business practices for Copaxone are not unique. During
President Trump’s first term, drug companies have continued to aggressively raise prices. A
recent report found that drug companies have raised list price of over 600 single-source brand
name drugs by a median 21.4% between January 2018 and June 2020. 157
The Committee’s investigation makes clear that without significant structural reforms
like Medicare negotiation, the pharmaceutical industry will continue to raise prices on critical
and lifesaving medications, and many Americans will remain unable to afford their prescriptions.

157

See State of California, Office of Statewide Health Planning and Development, Prescription Drug
Wholesale Acquisition Cost (WAC) Increases (Aug. 17, 2020) (online at oshpd.ca.gov/visualizations/prescriptiondrug-wholesale-acquisition-cost-increases/).

45