Three drug companies to pay $421 million in fraud settlement

Dec 9 2010

Los Angeles Times: Three pharmaceutical firms — Roxane, Abbott Laboratories and B. Braun Medical — "agreed to pay more than $421 million to settle claims of defrauding Medicare and Medicaid — the latest in a string of large healthcare fraud settlements announced by the Justice Department. The drug companies charged one set of prices to doctors and pharmacies but reported another set of inflated figures that were used as benchmarks by government insurers reimbursing healthcare providers, authorities said" (Zajac, 12/8).

The Wall Street Journal: "The actual price was often a fraction of the reported price, the government alleged, allowing doctors and pharmacists [who chose the drugs] to pocket the difference. The practice amounted to 'a kickback scheme funded by taxpayer dollars,' said Assistant Attorney General Tony West." The Justice Department didn't reveal how much the scheme cost the government and the companies "didn't admit any wrongdoing under the legal settlements," saying "they had entered into the agreements to avoid the expense of litigation" (Catan, 12/8).

The Washington Post: "The Justice Department has recovered more than $1.8 billion from pharmaceutical companies arising from similar unlawful drug-pricing schemes," West said at a news conference. West also said the companies "inflated the 'average wholesale price' for dozens of their products, including powerful antibiotics, used by Medicare and Medicaid patients. … By leading the government to believe that the drugs sold at higher prices, West added, pharmaceutical companies gained market share by offering substantial profits to pharmacists and doctors who dispensed their drugs" (Caldwell, 12/8).

Bloomberg: "'This practice was widespread in the pharmaceutical industry — so widespread in fact that average wholesale price, AWP, it was jokingly said, really stood for Ain't What's Paid,'" [he said]. ... 'Indeed, the only purchasers who paid the full inflated reported drug price were you, the American taxpayers.' The settlement resolves lawsuits under the False Claims Act, which lets private citizens sue on behalf of the government and share in any recovery. A Florida company that administers drugs at patients' homes, Ven-A-Care Inc., will get $88.4 million as whistleblowers" (Blum/Voreacos, 12/7).

ABC News: "Both B. Braun and Roxane are U.S. subsidiaries of German pharmaceutical firms. Under the settlement agreements, Abbott Laboratories agreed to pay $126.5 million in fines, B. Braun Medical agreed to pay $14.7 million, and Roxane will pay $280 million for making Medicare and Medicaid pay the allegedly inflated reimbursements" (Ryan, 12/7).