Governor Cuomo Announces Insurance Fraud Action Against Two International Opioid Manufacturers

Governor Cuomo Announces Insurance Fraud Action Against Two International Opioid Manufacturers

DFS Files Administrative Charges Against Teva and Allergan in Connection with the Opioid Crisis

DFS Claim Alleges Teva and Allergan Engaged in Fraudulent Marketing and Promotional Campaigns That Misrepresented the Safety and Efficacy of Opioid Drugs to Expand the Opioid Market and to Promote Their Drugs — Perpetuating the Opioid Crisis and Leading to a Dramatic Increase in Insurance Costs for New York Consumers

Governor Andrew M. Cuomo today announced the New York State Department of Financial Services has filed charges and initiated administrative proceedings against Teva Pharmaceutical Industries, Ltd., and its subsidiaries, Teva Pharmaceuticals USA, Inc., Cephalon, Inc., Watson Laboratories, Inc., Actavis Pharma, Inc., Actavis LLC, and Actavis Elizabeth LLC; and against Allergan PLC and its subsidiary Allergan Finance LLC. These charges are the third set to be filed in DFS's ongoing investigation into the entities that created and perpetuated the opioid crisis.

Teva has been a prolific manufacturer of opioids in the United States, manufacturing approximately 20% of the opioid products that flooded New York from 2006 to 2014. Teva manufactured both its own branded opioids as well as generic opioids through its Actavis subsidiaries. Allergan also manufactured opioid products from 2006 to 2014.

"New York will continue to aggressively investigate the bad actors that caused the opioid crisis - an American tragedy that has taken too many lives and caused irrevocable harm to communities in our state and across the country," Governor Cuomo said. "Everyone who has been affected by opioids deserves justice and we will make every effort to deliver it to them by pursuing the companies that defraud the public and holding them accountable to the fullest extent of the law."

The DFS Statement of Charges alleges that, like other opioid manufacturers, Teva and Allergan each knowingly furthered false narratives to legitimize dangerously powerful opioid products as appropriate for a broad spectrum of pain. In particular, the companies' messaging greatly downplayed the drugs' long-known addictive nature and risks. This strategic effort by the opioid industry caused an increased acceptance of opioids as medically legitimate, necessary, and appropriate painkillers by both patients and medical professionals. As a result, demand for opioids soared to unprecedented levels as did the predictable crisis of addiction and abuse that resulted from this overprescribing.

The allegations include the following:

  • Contrary to FDA prescribing guidelines, Teva through its subsidiary Cephalon intentionally marketed its branded fentanyl drugs for off-label use — meaning any use not specified in an application and approved by FDA — and misrepresented their risks while doing so. Fentanyl is an incredibly powerful opioid that is 100 times more potent than morphine. This off-label strategy succeeded. For example, the FDA approved Cephalon's first fentanyl drug, Actiq, only for the treatment of cancer pain. Through the off-label marketing strategy, however, Actiq sales skyrocketed from $16 million in 2000 to an excess of $590 million by 2006, at which time only 8% of patients were taking the drug for cancer pain. After Actiq was retired, Cephalon continued off-label promotional practices with its new fentanyl lozenge, Fentora.
  • Teva through its Cephalon subsidiary also crafted template "letters of medical necessity" for doctors to send to insurers to justify off-label use and get the prescriptions reimbursed. These letters were used by sales representatives to further entice healthcare providers into prescribing these powerful opioids to patients for increasingly broader use.
  • Allergan also misrepresented its drugs in marketing materials. In 2010, the FDA sent the company a warning letter concerning brochures the company had released for its drug Kadian. The FDA warned Allergan about the brochures' omission and minimization of risk information, their failure to state the drug's full indication, as well as unsubstantiated claims of efficacy and superiority over other opioid drugs.
  • Both Teva and Allergan used various third party "front groups" and doctors called "key opinion leaders" to disseminate unbranded and misleading messaging regarding the safety and efficacy of opioids in general. Such communications included medical education courses as well as pamphlets, websites, and books that targeted both patients and prescribers. Among other things, these materials downplayed the risks of addiction of opioids, labeled legitimate concerns by prescribers over those risks as "opiophobia," and dismissed patients' clear signs of addiction as "pseudoaddiction."

According to DFS's Statement of Charges, Teva and Allergan violated two New York Insurance Laws. Section 403 of the New York Insurance Law prohibits fraudulent insurance acts and carries with it penalties of up to $5,000 plus the amount of the fraudulent claim for each violation; DFS alleges that each fraudulent prescription constitutes a separate violation. Section 408 of the Financial Services Law prohibits intentional fraud or intentional misrepresentation of a material fact with respect to a financial product or service, which includes health insurance and carries with it penalties of up to $5,000 per violation; once again, DFS alleges that each fraudulent prescription constitutes a separate violation.

Read a copy of the DFS Statement of Charges for Teva and Allergan on the DFS website.

The hearing will be held at the office of the New York State Department of Financial Services, One State Street, New York, New York, beginning on October 26, 2020.


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