Teva Pharmaceuticals

In January 2024, Pomerantz resolved individual, opt-out (“direct” rather than “class”) shareholder actions against Teva Pharmaceuticals Ltd., in which the firm represented 22 Israeli institutional investors by reaching confidential, highly favorable settlements for each. Plaintiffs are some of the largest institutional investors in Israel—mutual fund firms, pension funds, and investment houses, including Israel’s largest pension fund manager, the largest private pension fund, and one of the largest life insurance managers. Plaintiffs were among the largest purchasers of Teva stock on both the New York Stock Exchange and the Tel Aviv Stock Exchange during the relevant period.

The case concerned an alleged price-fixing scheme as well as Teva’s alleged role in the devastating U.S. opioid crisis. In addition to overcoming the defendants’ motion to dismiss, during the litigation Pomerantz convinced the court to exercise supplemental jurisdiction over the firm’s clients’ Israeli law claims, opening a new avenue for investors to pursue recovery for losses from dual-listed shares.

Headquartered in Tel Aviv, Teva is one of the world’s largest manufacturers of generic drugs. Between July 2013 and April 2016, Teva raised the prices of its generic drugs 76 times. Pomerantz’s suit alleged that Teva increased its prices in collusion with its competitors in the generic drug market, forming part of what Connecticut assistant attorney general Joseph Nielsen would later call “most likely the largest cartel in the history of the United States.” This alleged price fixing scheme led to massive profits for Teva, driving the company’s share price to an all-time high of $72 per share in 2015. In the years that followed, the generic drug industry came under increasing scrutiny, culminating in May 2019 with the attorneys general of 47 states, the District of Columbia, and Puerto Rico filing a 524-page antitrust complaint detailing Teva’s collusive activity. Pomerantz’s suit alleged that throughout the class period, Teva attributed its soaring profits to good business practice, concealing from investors the price-fixing scheme that was the true driver of the company’s financial success.

Pomerantz’s suit also made claims about Teva’s role in the opioid crisis that has swept across the United States. Among Teva’s products are the drugs Actiq and Fentora, opioids used for the treatment of breakthrough cancer pain. We alleged that Teva was aware that opioids are highly addictive and prone to abuse when prescribed for chronic pain not caused by cancer and should be used only as a treatment of last resort. In spite of that knowledge, Teva allegedly engaged in an illegal campaign targeting the medical community and the public at large in order to expand the use of opioids for common pains like arthritis, lower back pain, and headaches. Teva allegedly disseminated materials that misrepresented the risks and benefits of opioid use, recruited physicians as paid speakers in order to secure “brand loyalty,” and directed doctors to present scripted talks supporting opioid therapy. According to the complaint, Teva’s campaign was part of the “aggressive marketing” that the National Institutes of Health identified as one of the key drivers of the opioid epidemic, leading to soaring profits for Teva while laying waste to communities across the United States.

Pomerantz’s suit was unique in addressing Teva’s role in the opioid crisis as part of its shareholder litigation, as this issue was not taken up by either the class action or the other opt outs. These opioid claims were sustained by the court when Pomerantz overcame the defendants’ motion to dismiss.

In the course of the litigation against Teva, Pomerantz achieved an important ruling for investors when it convinced the court to exercise supplemental jurisdiction over Israeli law claims. Pomerantz’s clients had purchased both Teva’s American Depositary Shares, which are listed on the New York Stock Exchange, and Teva’s common stock listed on the Tel Aviv Stock Exchange (“TASE”). The U.S. Supreme Court’s ruling in Morrison v. National Australia Bank Ltd (2010), which barred foreign plaintiffs from suing foreign issuers under U.S. federal securities laws to recover losses from transactions on foreign exchanges, would seem to prevent Pomerantz’s clients from pursuing recovery for losses related to their common stock purchases. In a major victory for investors, U.S. District Judge Stefan Underhill denied the motion to dismiss the Israeli law claims and exercised supplemental jurisdiction over the Israeli securities law claims, stating that Pomerantz’s clients’ “federal securities law and Israeli securities law claims seem to me, in every important respect, identical.”

Pomerantz’s Managing Partner, Jeremy Lieberman, led the firm’s litigation team with Partner Michael Wernke.