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Abbott, Boehringer settle fraud cases

The US Department of Justice has announced fraud investigation settlement deals with several companies that will collectively return over $421m to the Medicare and Medicaid programmes
The US Department of Justice has announced fraud investigation settlement deals with Abbott Laboratories, Boehringer Ingelheim's Roxane Laboratories subsidiary, and B Braun Medical that will collectively return more than $421m to the federal Medicare and Medicaid programmes.
The three cases centre on the "average wholesale price (AWP)" that pharma companies are required to report for their drugs, which the government relies upon to pay healthcare providers for the drugs under Medicare and Medicaid.
"Companies were supposed to report the average wholesale price they were actually charging for their drugs, but in fact, we allege, that's not what they did," said assistant attorney general Tony West, who announced the settlements at a press conference in Washington, DC. The Justice Department alleged that, instead, the companies intentionally inflated the AWPs of their drugs in order to create an incentive for healthcare providers to prescribe them, as the doctors could buy the drugs at a lower price than they were reimbursed by the government and keep the difference. 

"Not only did this practice cost our public healthcare programmes millions of dollars, it also threatened to undermine the integrity of the choices healthcare providers made for their patients," West said. The practice was brought to the Justice Department's attention by whistleblowers at a Florida pharmacy called Ven-A-Care, who will receive approximately $88.4m of the total settlement money. 

Roxane is paying $280m to resolve claims that it reported false prices for nine of its drugs. Abbott is paying $126.5 million to resolve claims regarding its pricing of two of its antibiotics, as well as dextrose solutions, sodium chloride solutions and sterile water, which are products primarily used to facilitate injection of other drugs. Braun, a US subsidiary of the German pharma company Braun Melsungen AG, will pay $14.7m to resolve allegations that it caused the Medicaid programme to pay inflated amounts for 49 of its drugs. 
The settlements end a multiyear investigation that was conducted by the Civil Divisions in the US Attorneys Offices for Massachusetts and the Southern District of Florida, as well as by the Office of Inspector General of the US Department of Health and Human Services. 

"With these settlements, the Department of Justice has now recovered more than $1.8bn from pharmaceutical manufacturers arising from similar unlawful drug pricing schemes," West said. He noted that since January 2009, the Civil Division, working with US Attorneys in various states, has recovered more than $5bn overall from the healthcare industry in civil and criminal cases involving fraud of various kinds. 

9th December 2010


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