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Drug Firm to Pay Feds $280 Million to Settle Pricing Claims

Cheryl Clark, for HealthLeaders Media, December 22, 2010

Dey Pharma, LP, maker of several drugs has agreed to pay $280 million to settle U.S. Justice Department accusations that it violated the False Claims Act by artificially inflating prices for drugs reimbursed with federal funds.

The settlement is the fourth involving a pharmaceutical manufacturer this month, following agreements with Abbott Laboratories, B. Braun Medical Inc. and Roxane Laboratories, which totaled $421.1 million. Justice officials say they have recovered more than $2 billion from pharmaceutical companies for similar "unlawful drug pricing schemes."

In the Dey allegation, which was related by whistleblower Ven-A-Care of the Florida Keys, a home-infusion company, Justice officials said that the manufacturer overpriced the drugs Albuterol Sulfate, Albuterol MDI, Cromolyn Sodium, and Ipratropium Bromide.

"The difference between the resulting inflated government payments and the actual price paid by healthcare providers for a drug is referred to as the 'spread'," the DoJ said in a statement. "The larger the spread on a drug, the larger the profit for the healthcare provider or pharmacist who is reimbursed by the government."  The government alleges that Dey created artificially inflated spreads to market, promote and sell the drugs to existing and potential customers.

As a result, Justice officials said, "the government paid millions of claims for far greater amounts than it would have if Dey had reported truthful prices."

The case stems information provided by Ven-A-Care under qui tam provisions that allow entities who witness or become aware of fraud to file suit on behalf of the U.S. government and share a percentage of money recovered. Ven-A-Care will receive $67.2 million.

Justice officials said the pharmaceutical practice of fraudulently overpricing drugs is a major area being targeted by HEAT, the Health Care Fraud Prevention and Enforcement Action Team set up in 2009 to form collaborations between the Department of Health and Human Services and the U.S. Attorney General.

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