Drug Makers to Pay $421M to Settle False Claims Allegations

John Commins, December 8, 2010

Drug makers Abbott Laboratories, B. Braun Medical, and Roxane Laboratories will pay $421 million to settle whistleblower allegations that they inflated prices for drugs paid for by Medicare and Medicaid, a violation of the False Claims Act, the U.S. Justice Department announced Tuesday.

DOJ said the three drug makers created artificially inflated "spreads" – the differences between the inflated government payments and the actual price paid by healthcare providers -- for drugs to market, promote and sell the drugs to existing and potential customers.

Because Medicare and Medicaid overpayments were involved, DOJ said, the drug makers caused the government to pay millions of claims for far greater amounts than it would have if the drug makers had reported truthful prices.

"Some pharmaceutical manufacturers have asserted that a culture within the industry gave them license to manipulate the system to suit their interests. This is not the case," said Carmen M. Ortiz, U.S. Attorney for Massachusetts, which led the prosecution. "When manufacturers report drug pricing information that they know will be relied upon by government healthcare programs, they are obliged to report honest prices. It is unlawful to do otherwise."

The settlements resolve allegations brought by whistleblower suits filed by a Florida home infusion company, Ven-A-Care of the Florida Keys Inc. As part of these settlements, the Ven-A-Care whistleblowers could receive about $88.4 million.

Roxane is paying $280 million to resolve claims against it and affiliates Roxane Laboratories Inc., Boehringer Ingelheim Corp. and Boehringer Ingelheim Pharmaceuticals Inc. for the following drugs: Azathioprine, Diclofenac Sodium, Furosemide, Hydromorphone, Ipratropium Bromide, Oramorph SR, Roxanol, Roxicodone and Sodium Polystyrene Sulfonate.
Roxane denied any wrongdoing and said it agreed to the settlement to end "expensive and disruptive litigation with the Department of Justice."

John Commins

John Commins is a senior editor at HealthLeaders Media.

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