The opioid affair in which Israeli drugmaker Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) has been embroiled has now been settled in Israel. The economic court in Tel Aviv has approved suits filed against Teva Israel on the matter and among other rulings has decided that insurance companies will pay Teva $40 million - the highest amount ever achieved in a derivative action in Israel.
This follows settlements in the US last year with all 50 states in the US in which Teva will pay $4.3 billion to end the opioid lawsuits against it without admitting any wrongdoing.
At the heart of the matter were allegations that pharmaceutical companies in the US, headed by Purdue pharma, controlled by the Sackler family, had aggressively marketed narcotic painkilling drugs, while concealing that they contained addictive and dangerous ingredients. An estimated hundreds of thousands of victims died of drug overdoses in the affair, which was declared a national emergency in the US.
Two procedures since 2019
Israel was also affected by the drug scandal. In 2019 two cases were opened in the Tel Aviv economic court ahead of a derivatives suit claiming that senior executives at Teva worked, "To massively promote opioid use, while deviating from the prescribed medical indication for these drugs," and that the company's directors and CEO failed to supervise what was happening in the company. The lawsuits also claimed that Teva's directors did not act to sue senior employees of the company and managers of its subsidiaries for their alleged involvement in the affair.
The lawsuits were postponed until completion of the proceedings abroad. With the consolidation of the settlement in the US, the plaintiffs in Israel conducted a mediation process with Teva, which took place before retired Supreme Court judge, Zvi Zylbertal. The settlement reached has been approved by the Teva board of directors, and was given the force of a court decision by Judge Sigal Yakobi.
Under the settlement, Teva's insurance company, which as far as is known is not Israeli, will pay the pharmaceutical company $40 million to fully close all potential claims and claims that Teva might have against its officers, executives and employees, and the companies associated with it regarding their responsibility, for the alleged damages caused to the company in the opioid affair.
The plaintiffs that filed the derivative lawsuits - shareholders in Teva, Judith de Lange, Avraham Barak and the Litecom company, will be compensated to the amount of $532,000, and the lawyers who represented them will receive fees totaling $4,258,000. The Israel Securities Authority and the Ministry of Justice, whose opinion is required for approving settlements in derivative and representative actions, told the court that they do not oppose the settlement.
Published by Globes, Israel business news - en.globes.co.il - on September 26, 2024.
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