Abbott, B. Braun, and Roxane Pay $421.2 Million to Settle False-Claims Allegations

Dec 16, 2010

Last week, Abbott Laboratories (Abbott Park, IL), B. Braun Medical (Bethlehem, PA), and Roxane Laboratories, a subsidiary of Boehringer Ingelheim (Ingelheim am Rhein, Germany), agreed to pay the United States $421 million to settle False Claims Act allegations. The settlements resolve US government claims that the companies engaged in a scheme to report false and inflated prices for various pharmaceutical products, thus helping healthcare providers to profit by defrauding federal healthcare programs.

The government alleged that Abbott, Roxane, and Braun reported higher prices than the actual sales prices for certain products to market, promote, and sell them to current 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 healthcare providers to submit false claims to federal healthcare programs. The government thus paid millions of claims for greater amounts than it would have if Abbott, B. Braun, and Roxane had reported truthful prices, according to a Justice Department press release.

Roxane is paying $280 million to resolve claims against it and related companies Boehringer Ingelheim and Boehringer Ingelheim Pharmaceuticals. In a suit filed against Roxane on Jan. 18, 2007, the US claimed that Roxane reported false prices for azathioprine, diclofenac sodium, furosemide, hydromorphone, ipratropium bromide, oramorph SR, Roxanol, Roxicodone, and sodium polystyrene sulfonate.

Abbott agreed to pay $126.5 million to settle claims against it in two cases. In a case initially filed in the Southern District of Florida, the US alleged that Abbott had violated the False Claims Act with respect to its pricing of vancomycin and products to facilitate intravenous infusion or injection (i.e., dextrose solutions, sodium-chloride solutions, and sterile water). The second lawsuit, filed by a whistleblower, involved Abbott’s pricing of erythromycin.

B. Braun Medical agreed to pay about $14.7 million to settle allegations that it caused Medicaid to pay inflated amounts for 49 of its drug products, including various intravenously administered drugs.

These three settlements are a part of the US Attorney General’s effort to fight healthcare fraud. Using the False Claims Act, the Justice Department has recovered approximately $4.6 billion since January 2009 in healthcare-fraud cases. During this period, the Justice Department has opened more healthcare-fraud cases, secured larger fines and judgments, and recovered more dollars lost to healthcare fraud than in any other period, according to a Justice Department press release. Criminal fines, forfeitures, restitution, and disgorgement under the US Food, Drug, and Cosmetic Act have yielded $3 billion, another record number.

The three agreements mark the latest high-profile healthcare-fraud cases to be settled this year. Earlier this year, AstraZeneca (London) agreed to pay $520 million to resolve allegations that it illegally marketed its antipsychotic drug Seroquel for unapproved uses, thus causing false claims for payment to be submitted to federal insurance programs. Under the terms of the agreement, the federal government is to receive $301,907,007, and the state Medicaid programs and the District of Columbia are to share $218,092,993 of the civil settlement.

Last year, Pfizer (New York) and its subsidiary Pharmacia and Upjohn agreed to pay $2.3 billion to resolve allegations of illegally promoting pharmaceutical products such as Bextra. The agreement was the largest healthcare-fraud settlement in the history of the Department of Justice. Pharmacia and Upjohn pleaded guilty to misbranding Bextra with the intent to defraud or mislead. Pfizer promoted Bextra for uses and dosages that the US Food and Drug Administration specifically had not approved because of safety concerns. The company agreed to pay a criminal fine of $1.195 billion, and Pharmacia and Upjohn agreed to forfeit $105 million.

See related PharmTech articles:
Grassley Investigates Drugmakers' Whistleblower Policies (ePT)

AstraZeneca: Unwitting Advocate for Disclosure? (blog post)

Corrupt practices cost healthcare $23 billion (PharmTech Europe)