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Since January of 2009, the Justice Department's Civil Division and the U.S. Attorneys around the nation have recovered more than $9 billion in cases alleging false claims, fraud against the government, and violations of the Food, Drug and Cosmetic Act.
Cases alleging fraud or false claims against government health care programs are the largest portion of these recoveries, and during this period the Justice Department has opened more health care fraud cases, secured larger fines and judgments, and recovered more dollars lost to health care fraud than in any other period: more than $5 billion, the Justice Department reports.
Criminal fines, forfeitures, restitution, and disgorgement under the Food, Drug and Cosmetic Act have yielded another $3 billion — again, a record number.
In some of the biggest recoveries recently, Abbott Laboratories Inc., B. Braun Medical Inc. and Roxane Laboratories Inc. (now known as Boehringer Ingelheim Roxane Inc.) and affiliated entities have agreed to pay $421 million to settle False Claims Act allegations, the Justice Department announced recently. These settlements resolve claims by the United States that the defendants engaged in a scheme to report false and inflated prices for numerous pharmaceutical products knowing that federal health care programs relied on those reported prices to set payment rates. The actual sales prices for the products were far less than what defendants reported, the Justice Department says.
The difference between the resulting inflated government payments and the actual price paid by health care providers for a drug is referred to as the "spread." The larger the spread on a drug, the larger the profit for the health care provider or pharmacist who gets reimbursed by the government, Tony West, JD, assistant attorney general for the Justice Department's Civil Division, explained when announcing the settlement. The government alleges that Abbott, Roxane, and B. Braun created artificially inflated spreads to market, promote, and sell the drugs to existing and potential customers.
Because payment from the Medicare and Medicaid programs was based on the false inflated prices, the government alleged that the defendants caused false claims to be submitted to federal healthcare programs, and as a result, the government paid millions of claims for far greater amounts than it would have if Abbott, B. Braun, and Roxane had reported truthful prices.
Abbott is paying $126.5 million to resolve the claims against it in two qui tam cases. In the first, the United States intervened and filed suit against Abbott in May 2006. This case initially was filed in the Southern District of Florida before being transferred for pre-trial proceedings to pending multi-district litigation in the District of Massachusetts. In this case, the United States alleged violations by Abbott of the False Claims Act with respect to its pricing of dextrose solutions, sodium chloride solutions, sterile water, and vancomycin. The second lawsuit was filed by a whistleblower and involved Abbott's pricing of the drug erythromycin, an oral antibiotic.
"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," West said. "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."