Teva Pharmaceutical (TEVA) - Get Report shares fell Tuesday after news that the U.S. government was suing the giant maker of generic drugs, alleging that kickbacks it paid for its multiple sclerosis drug Copaxone led to false Medicare claims.
Teva shares recently traded at $10.62, down 8.39%. The stock has risen 8% year to date.
The government claims Israel-based Teva gave two purportedly independent charitable foundations more than $300 million for Medicare co-payments of Copaxone patients, Reuters reported.
Teva shielded patients from a 300% surge in Copaxone's price through use of the foundation. That created hundreds of millions of dollars of false claims and a matching amount of revenue for Teva, the government claimed.
Copaxone represents one of Teva’s biggest sellers. It produced $435 million of revenue in North America in the first six months of the year, Reuters reported.
Teva denied the charges, saying the lawsuit "only seeks to further restrict patients' access to important medicines and healthcare," according to Reuters.
Morningstar analyst Soo Romanoff expressed some optimism about Teva in a report earlier this month.
“Despite our extreme risk rating reflecting external factors and high levels of debt, we continue to view Teva's shares to be attractive and maintain a $20 fair value estimate,” she wrote.
“As the shelter-in-place orders are rolled back, we will continue to see the normalization of generics and strength in specialty and biosimilar traction. Continued implementation of its turn-around strategy should position Teva to meet its financial obligations and flex its scale while positioning it for growth. Also, management believes the proposed opioid settlement framework remains intact.”