An international pharmaceutical company will receive a $40 million, performance-based tax break to move its U.S. headquarters from Pennsylvania to New Jersey, despite multiple lawsuits accusing it of contributing to the national opioid crisis.
Last week, Gov. Phil Murphy announced that Teva Pharmaceuticals USA, the North American arm of Teva Pharmaceuticals Industries Ltd., will relocate its U.S. headquarters from North Wales, Pennsylvania to Parsippany-Troy Hills, bringing “more than 1,000 high-wage jobs to New Jersey.”
The governor’s press statement about the relocation didn’t mention that Teva USA was named alongside several other drug manufacturers in a 2017 lawsuit launched by the City of Newark, which accused the company – and 10 of its peers – of “hiding behind the scene as the connection/supplier to local drug dealers.”
The New Jersey Economic Development Authority (EDA) approved $39.9 million in performance-based tax credits for the Teva relocation through the Grow New Jersey (Grow NJ) program at its June 2018 board meeting.
It’s estimated that the project will have a net benefit to the state of $247.4 million over a 20-year period, the EDA stated. (Read more about the company’s relocation plans and their tax break below)
“The presence of global life sciences companies like Teva Pharmaceuticals is critical to New Jersey’s ability to strengthen a thriving innovation ecosystem,” Gov. Phil Murphy said. “We are thrilled to expand our welcome to Teva, and its more than 1,000 employees, in the Garden State – the place to be for the world’s most competitive life sciences companies.”
Spokespeople for Murphy declined to comment for this article, deferring to the EDA’s statement on the pending litigation (read more below).
Teva Pharmaceuticals has nearly 550 generic medicines available. Currently, one in seven generic prescriptions dispensed in the U.S. is filled with a Teva generic product, according to the company’s website.
‘DECEPTIVELY MARKETING OPIOIDS’: A CITY’S LAWSUIT
In October 2017, officials with the City of Newark announced that the municipality launched a lawsuit against 11 opioid manufacturers, including Teva USA.
Named alongside Teva were other corporations including Purdue Pharma L.P., Purdue Pharma Inc., the Purdue Frederick Company; Cephalon Inc.; Janssen Pharmaceuticals Inc.; Ortho-McNeil-Janssen Pharmaceuticals Inc.; Janssen Pharmaceutical Inc.; Endo Health Solutions Inc., and Endo Pharmaceuticals Inc.
City officials explained their rationale for launching the lawsuit in a press statement:
“Until the mid-1990s, opioids were widely thought to be too addictive for use for chronic pain conditions, which would require long-term use of the drugs at increasingly high doses. For these conditions, the risks of addiction and other side effects outweighed any benefit from the drugs. For the last two decades, however, the suit claims that the defendants sought successfully to turn that consensus on its head, primarily by covering up the risk of addiction and overstating the benefits of using opioids long-term.”
A Teva spokesperson provided TAP Into Newark with the following statement about the litigation:
“Teva is committed to the appropriate use of opioid medicines, and we recognize the critical public health issues impacting communities across the U.S. as a result of illegal drug use as well as the misuse and abuse of opioids that are available legally by prescription.”
Teva’s corporate website states:
“The US Food and Drug Administration (FDA) has emphasized the importance of developing abuse deterrent formulations of opioids. We are working to address the problem of opioid abuse and to assure that such medications remain available for use in appropriate patients. Teva has a large development program in the field of potential abuse deterrent opioids. Teva’s proprietary CIMA technology is an abuse deterrent technology for oral tablets. CIMA is based on a multi-layer gel-forming polymer coating that regulates drug release. CIMA combines three physical and chemical barriers (gelling, barrier and matrix) as a deterrent against the main forms of abuse: Crushing for snorting, IV extraction and dose dumping in alcohol. We are developing a broad abuse deterrent opioid portfolio based on CIMA technology.”
Newark isn’t the only government entity to take aim at Teva with opioid-related legal action.
In May, officials in Bucks County, Pennsylvania announced that the county filed a lawsuit against major manufacturers and distributors of prescription opioids in an attempt to stop the flood of addictive medications into the community and recoup costs associated with the crisis.
Defendants included Teva Pharmaceuticals, Purdue Pharma, Janssen Pharmaceuticals and Endo Pharmaceuticals, among others.
In January, the City of Philadelphia launched a similar lawsuit against several large drug manufacturers, including Teva.
“The epidemic currently plaguing the city has exacted a grim toll on Philadelphia residents and their families,” Mayor Jim Kenney said in a statement on the suit. “And the cause can be directly linked to the methods used by manufacturers to market and sell their products to doctors and the public. Those tactics have to end.”
Virginia Pellerin, a spokesperson for the EDA, told Patch that Teva disclosed that it had “pending opioid litigation filed against the company and its affiliates” in its Grow NJ application.
However, under the EDA’s disqualification/debarment regulations and Executive Order 34 (Byrne 1976), unresolved litigation is not a factor in the decision whether to disqualify or debar an entity from receiving financial assistance, Pellerin said.
But that doesn’t mean Teva’s $40 million tax break is in the clear just yet.
“The EDA, a state entity, requires applicants to answer a legal questionnaire as part of the application process,” Pellerin stated. “Once approved, an applicant has an ongoing obligation to report any relevant concluded matters on an annual basis. If in the future a pending matter results in a negative outcome, the EDA would review the matter to determine if it impacts the award.”
TEVA’S RELOCATION PLANS: ‘CREATING 843 JOBS’
Teva, a leading pharmaceutical company headquartered globally in Israel, also considered other locations to house its U.S. headquarters and commercial operations – including Frazer, Pennsylvania – but eventually settled on Morris County, even though New Jersey is the “more expensive option,” according to its Grow NJ application.
The company will expand its existing Parsippany location at 400 Interpace Parkway to nearly 350,000 square feet. It expects to transfer and create 843 jobs and retain 232 existing positions that were “at risk of leaving New Jersey.”
The median annual wage of the positions is estimated at $128,073, about 71.2 % higher than the median salary in Morris County, the EDA stated.
The EDA plans to hold Teva responsible for any “performance-based incentives,” which include job creation/retention and capital investment. Those requirements include a $31.45 million “capital investment” in the new facility that must be completed by Oct. 1, 2019.
“While Teva will retain a significant presence in Pennsylvania, reducing the number of sites supports our drive to continue to improve productivity and efficiencies,” said Brendan O’Grady, executive vice president and head of North America Commercial. “We’re pleased to expand our presence in New Jersey, having closer proximity to a vibrant business hub and a dynamic life sciences environment, all while increasing jobs and preserving many existing roles.”
Earlier this year, Teva Pharmaceuticals announced that internal “restructuring” will result in layoffs for 14,000 employees worldwide. The company’s North American headquarters are in North Wales, and it also has operations in West Chester, Horsham, and Frazer.
In total, 208 employees in Pennsylvania were laid off as part of the restructuring, according to a notice from the Pennsylvania Department of Labor and Industry.
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Photo: The Horsham, PA., offices of Teva Pharmaceuticals North America in 2005 (AP Photo/George Widman)