Opioid Manufacturers Teva and Allergan Face Insurance Fraud Charges

The N.Y. DFS files charges against Teva Pharmaceuticals and Allergan for insurance fraud in connection to the state’s opioid crisis.
By: | September 30, 2020

The New York State Department of Financial Services (DFS) has filed administrative charges against Teva Pharmaceuticals and Allergan, announced state Governor Andrew M. Cuomo in late August.

The charges allege Teva and Allergan, a subsidiary of AbbVie, committed insurance fraud in connection to the state’s opioid crisis.

The N.Y. DFS further alleged that Teva and Allergan engaged in fraudulent marketing and promotional campaigns that misrepresented the safety and efficacy of opioid drugs in order to expand the opioid market.

It wrote, “The opioid epidemic has caused a devasting public health crisis in the United States. The human cost of that crisis has been profound, with more than 400,000 deaths linked to opioid-related drug abuse since 1997. The financial cost has been debilitating, with costs to the U.S. economy estimate in the hundreds of billions of dollars.”

The allegations also point out that the crisis was created and fueled in part by greed from pharmaceutical companies, like Teva and Allergan, that aimed to make a profit.

“Entities and individuals at multiple levels of the opioid supply chain enjoyed huge profits as the drugs they sold both destroyed lives and dramatically increased the cost of health care in America,” it wrote.

Teva and its subsidiaries are considered a prolific manufacturer of opioids in the U.S., putting approximately 20% of the opioid products that flooded New York between 2006 to 2014 on the market. Allergan, too, supplied the state with opioid products in that time.

The actual allegations span a number of activities, including Teva intentionally marketing its branded fentanyl drugs for off-label use, despite FDA guidelines; Teva crafting “letters of medical necessity” for doctors and prescribers to send to insurers to justify off-label use and get prescriptions reimbursed; Allergan ignoring an FDA-issued warning letter in 2010 regarding the company’s omission and minimization of opioid risk factors in its marketing brochures; and both Teva and Allergan using various third party “front groups” and “key opinion leader” doctors to disseminate unbranded and misleading materials on safety and efficacy of opioid use.

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The DFS charges state that Teva and Allergan violated two New York Insurance Laws: one that prohibits fraudulent insurance acts and carries with it penalties up to $5,000 plus the amount of the fraudulent claim for each violation; and another that prohibits intentional fraud or misrepresentation of a material fact with a financial product or service, including health insurance.

Scorecard: For now, it is a waiting game. The hearing for the matter is slated for October 26, 2020.

Takeaway: This is not the first action against opioid manufacturers, and it certainly won’t be the last as state governments seek accountability for this devastating epidemic. &

Autumn Heisler is the content strategist at Risk & Insurance®. She can be reached at [email protected]

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The R&I Editorial Team can be reached at [email protected]