Drug Company Whistleblower Lawsuits Settled for $421 Million

Abbott Laboratories Inc., B. Braun Medical Inc. and Roxane Laboratories Inc. have agreed to pay $421 million to settle False Claims Act allegations, the US Justice Department announced yesterday. The drug makers and their entities were accused in whistleblower lawsuits of engaging in schemes to drastically inflate the price of drugs. The costs of those drugs were reimbursed by Medicare and Medicaid and ultimately the US taxpayer, the Justice Department said.

The False Claims Act allows for private persons to file suits to provide the government information about wrongdoing. Under the statute, if it is established that a person has knowingly submitted or caused others to submit false or fraudulent claims to the United States, the government can recover treble damages and $5,500 to $11,000 for each violation of the statute. If the government is successful in resolving or litigating its claims, the whistle blower who initiated the action can receive a share of between 15 percent to 25 percent of the amount recovered.

The False Claims Act suits were filed by a Florida home infusion company, Ven-A-Care of the Florida Keys Inc., and its principals, the Justice Department said. As part of these settlements, the Ven-A-Care whistleblowers will receive approximately $88.4 million.

Roxane is paying $280 million to resolve claims against it and related entities (Roxane Laboratories Inc., Boehringer Ingelheim Corp. and Boehringer Ingelheim Pharmaceuticals Inc.) in federal district court in the District of Massachusetts. Roxane allegedly reported false prices for the following drugs: Azathioprine, Diclofenac Sodium, Furosemide, Hydromorphone, Ipratropium Bromide, Oramorph SR, Roxanol, Roxicodone and Sodium Polystyrene Sulfonate.

Abbott is paying $126.5 million to resolve the claims against it in two qui tam cases. The Justice Department alleged violations by Abbott of the False Claims Act with respect to its pricing of dextrose solutions, sodium chloride solutions, sterile water and vancomycin. Dextrose solutions, sodium chloride solutions and sterile water are generic, water-based solutions primarily used to facilitate the intravenous infusion or injection of other drugs. Vancomycin is a powerful, intravenous antibiotic. The second lawsuit was filed by a whistleblower, and involved Abbott’s pricing of the drug erythromycin, an oral antibiotic.

Braun Medical Inc., a US subsidiary of German pharmaceutical company, Braun Melsungen AG, has agreed to pay $14,744,000 to resolve allegations that it caused the Medicaid program to pay inflated amounts for 49 of its drug products. These products included water-based solutions used to facilitate the intravenous infusion of other drugs and for fluid replacement, including dextrose solutions, sodium chloride solutions, sterile water and lactated ringers solution. They also included intravenously administered nutritional solutions and a variety of other intravenously administered drugs.

“With these settlements, the Department of Justice has now recovered more than $1.8 billion from pharmaceutical manufacturers arising from similar unlawful drug pricing schemes. By offering their customers one price and then falsely reporting a greatly inflated price to the lists the government uses when determining how much to pay for the drugs, we believe pharmaceutical companies created an incentive for the purchase of their drugs, since buyers could obtain government payment at the inflated price and pocket the difference,” Tony West, Assistant Attorney General for the Justice Department’s Civil Division, said in a statement. “Taxpayer-funded kickback schemes like this not only cost federal healthcare programs millions of dollars, they threaten to undermine the integrity of the choices health care providers make for their patients.”

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