AmerisourceBergen to Pay $625M in Cancer Drug Repackaging Scheme

This week's civil settlement, and last year's separate $260 million criminal settlement, add up to $885 million in penalties for one of the nation's largest drug wholesalers.

AmerisourceBergen Corp. and its subsidiaries will pay $625 million to resolve civil claims that the drug wholesaler improperly repackaged cancer drugs into pre-filled syringes and sent them to physicians treating cancer patients, the Department of Justice said.

According to federal prosecutors, the drug wholesaling giant profiteered by skimming drug "overfill" contained in the original FDA-approved sterile vials and creating pre-filled syringes through a subsidiary, the now-shuttered Medical Initiatives Inc., that ABC claimed was a pharmacy.

Prosecutors said Alabama-based MII shipped millions of repackaged pre-filled syringes to oncology practices, with drugs that included Procrit, Aloxi, Kytril and its generic form granisetron, Anzemet and Neupogen. 

As part of the scheme, ABC purchased original vials from manufacturers, broke their sterility, pooled the contents, and repackaged the drugs into pre-filled syringes, DOJ said. 

All the while, ABC submitted no data to the FDA to show that it had ensured the safety and efficacy of the repackaged drugs, which prosecutors said were sometimes prepared in non-sterile conditions and contaminated.

ABC used the overfill to create more doses than it bought from the manufacturers. Federal prosecutors allege that ABC's scheme allowed it to bill multiple providers for the same vial of drug. Those providers then billed Medicare, Medicaid, TRICARE, the VA and other federal healthcare programs for the same vial.

The scheme also enabled ABC to boost its market share with product discounts, which it leveraged to lure new customers and to keep existing customers, DOJ said.

Last year, AmerisourceBergen Specialty Group, a subsidiary of AmerisourceBergen Corp., pled guilty to illegally distributing misbranded drugs and paid $260 million to resolve criminal charges for distributing drugs from a facility that was not registered with the FDA.

This week's settlement resolves ABC's civil liability under the False Claims Act for billing federal healthcare programs for the repackaged drugs. In total, the drug wholesaler will pay about $885 million in civil and criminal penalties.

"ABC placed corporate profits over patients’ needs, endangering the health of vulnerable cancer patients," said Richard P. Donoghue, U.S. Attorney for the Eastern District of New York.

ABC, one of the nation’s largest wholesale drug companies and ranked No. 11 on the Fortune 500 list, will pay the federal government $582 million, and will pay state Medicaid programs $43 million, plus accrued interest, as part of the civil settlement. 

The deal with prosecutors resolves claims made in three whistleblower lawsuits, and those plaintiffs will receive $93 million of the federal recovery.  

The settlement also resolves allegations that ABC paid kickbacks to physicians to induce them to purchase Procrit in pre-filled syringes. The kickbacks came as general pharmacy credits provided to customers, but which were not identifiable as specific to Procrit on invoices.  

ABC on Monday issued the following statement: "By resolving this matter and entering into the Corporate Integrity Agreement, ABC acknowledged that some of its practices at MII were not consistent with AmerisourceBergen’s approach to corporate compliance."

"Medical Initiatives was voluntarily closed in 2014 and by entering into the corporate integrity agreement now, we are confirming both our commitment to compliance and to the continual evaluation and enhancement of our already robust compliance programs."