Halman Aldubi Provident & Pension Funds Ltd. v. Teva Pharm. Indus.
| Docket Number | Civil Action 20-4660-KSM |
| Decision Date | 03 November 2023 |
| Parties | HALMAN ALDUBI PROVIDENT AND PENSION FUNDS LTD., Plaintiff, v. TEVA PHARMACEUTICALS INDUSTRIES LIMITED, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
I. Introduction 1
II. Background 1
III. Procedural History ............................................................................................................... 4
IV. Discussion ............................................................................................................................ 6
1. Overlap with Ontario Settlement Class ........................................................................ 8
2. Applicability of Morrison ........................................................................................... 15
1. Numerosity ................................................................................................................. 21
2. Commonality .............................................................................................................. 22
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3. Typicality .................................................................................................................... 22
4. Adequacy .................................................................................................................... 28
1. Predominance ............................................................................................................. 35
2. Superiority .................................................................................................................. 54
V. Conclusion ............................................................................................................................ 55
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I. Introduction
Lead Plaintiff Gerald Forsythe, individually and on behalf of all others similarly situated, alleges that Teva Pharmaceuticals Industries Limited (“Teva”) and Teva executives Erez Vigodman, Eyal Desheh, Robert Koremans, Michael Derkacz, Kare Schultz, Michael McClellan, and Brendan O'Grady (collectively, the “Individual Defendants,” and together with Teva, “Defendants”) violated Section 10(b) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5 by making false and misleading statements and by failing to disclose material information about Teva's specialty drug Copaxone. (Doc. No. 1.) Plaintiff also claims that the Individual Defendants violated Section 20(a) of the Exchange Act because they knew or recklessly disregarded that Teva was making materially false and misleading statements and material omissions. (Id. ¶¶ 249-254.) Presently before the Court is Plaintiff's Motion to Certify the Class. (Doc. No. 90.) For the reasons below, the Court grants the motion for class certification.
II. Background
Teva is a global pharmaceutical company that sells generics, specialty medicines, and over-the-counter products. (Doc. No. 64-2 ¶ 27.) Teva shares are dual-listed on the New York Stock Exchange (“NYSE”) and the Tel Aviv Stock Exchange (“TASE”). (Doc. No. 90-1 at 12.) Shares purchased on the NYSE are American Depository Shares (“ADSs”), and shares purchased on the TASE are labeled “ordinary shares.” (Id.) Each ADS represents one ordinary share. (Id.) One of Teva's primary products is the specialty drug, Copaxone (glatiramer acetate injection), an injectable drug used to treat patients with multiple sclerosis. (Id. ¶ 28-29.)
Teva sponsors “Shared Solutions,” a program designed to increase patient access to Copaxone. (Id. ¶ 41.) Through the program, Teva trains patients on how to inject the drug, offers patients injection devices to administer the drug, and assigns patients case managers who help patients secure insurance coverage for the drug. (Id.) In 2006, in connection with the Shared Solutions program, Teva contracted with Advanced Care Scripts, Inc. (“ACS”), a specialty pharmacy. (Id. ¶ 42.) Teva sent ACS prescriptions for patients participating in Shared Solutions who “either had or were eligible for Medicare Part D coverage.” (Id.) For the patients who did not already have Medicare Part D coverage, ACS assisted with the enrollment process. (Id.) And for the patients who already had Medicare Part D coverage and were eligible for copay coverage from a patient assistance program (“PAP”),[2]ACS helped them apply to a PAP for coverage. (Id.) Teva also provided free Copaxone to low- or no-income patients; however, if those patients were eligible for Medicare Part D, Teva sent those patients to ACS for assistance enrolling in Medicare Part D or applying for coverage from a PAP. (Doc. No. 57 ¶ 43.)
ACS referred Teva's Copaxone patients to two PAPs for co-pay assistance: the Chronic Disease Fund (“CDF”) and The Assistance Fund (“TAF”). (Id. ¶ 42.) Both CDF and TAF maintained funds dedicated to assisting multiple sclerosis patients, through which they “provided co-pay assistance to patients for, ostensibly, any of the [multiple sclerosis] drugs on the market.” (Id.) Teva regularly donated to both PAPs. (Id.) Under the applicable regulations, pharmaceutical companies may donate to PAPs; however, “the funds received through donations must be applied generally to all beneficiaries, and it is illegal for a Charitable PAP to apply the funds received to any particular drug.” (Id. ¶ 35.)
Teva allegedly ran afoul of those regulations. (Id. ¶ 48.) Teva did not intend its donations to CDF and TAF to cover co-payments for multiple sclerosis treatments generally; rather, it intended for its donations to CDF and TAF to only cover patients' co-pays on Copaxone. (Id.) Teva's intentions bore out. (Id. ¶ 46.) For instance, in December 2009 and January 2010, Teva donated $15.7 million to TAF, “approximately 99% of which was paid to Copaxone patients.” (Id.) In all, Teva donated tens of millions of dollars annually to CDF and TAF to fund Copaxone co-pays. (See id. ¶ 53 ().)
Copaxone patients receiving Medicare co-pay assistance from CDF and TAF made up roughly 27% of patients on Copaxone. (Id. ¶ 62.) Teva recognized that if it stopped funding these co-pay assistance programs, the patients “may not fill Rx and go off therapy, which would result in a negative impact to the brand of $210-280M.” (Id.) While Teva was donating to CDF and TAF, it “raised the price of Copaxone at a rate . . . over 19 times the rate of inflation, from approximately $17,000 per year to $73,000 per year.” (Id. ¶ 69.)
On March 21, 2017, the United States Attorney's Office for the District of Massachusetts subpoenaed Teva for information about the company's donations to charitable organizations, including PAPs. (Id. ¶ 118.) Teva disclosed the subpoena in its next Form 6-K filed on May 11, 2017. (Doc. No. 67 at 39.) Despite receiving this subpoena, Teva continued operating the Shared Solutions program and making donations to CDF and TAF through at least 2018. (Doc. No. 64-2 ¶ 120.) Plaintiff alleges that both before and after receiving the subpoena, Teva made various misrepresentations regarding Copaxone and Teva's Shared Solutions program. Plaintiff alleges that Teva never disclosed its scheme to make “Copaxone donations” to PAPs. (See, e.g., id. ¶ 71.)
On August 18, 2020, the U.S. Attorney's Office for the District of Massachusetts filed a complaint (“DOJ complaint”) against Teva for alleged violations of the False Claims Act.[3](Id. ¶ 168.) In the DOJ complaint, the Government contends that Teva's payments to CDF and TAF were “kickbacks” that allowed the company to increase the price of Copaxone while leaving the “American taxpayers to shoulder the high prices that Teva set.” (Id.) Plaintiff alleges that the DOJ complaint is the corrective disclosure which revealed Teva's Copaxone scheme to the market. (Id.)
III. Procedural History
On September 23, 2020, Halman Aldubi Provident and Pension Funds Ltd. (“Halman Aldubi”) commenced this lawsuit individually and on behalf of all others similarly situated.[4] It alleged that Teva committed securities fraud by making false and misleading statements regarding Copaxone and its Shared Solutions program under an “artificial inflation maintenance” theory.[5](Doc. No. 1.) On March 26, 2021, the Court named The Investor...
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