Drug firms to pay more than $421 million to settle fraud charges
Three pharmaceutical firms 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. The difference in price, or spread, amounted to kickbacks to the companies’ customers, according to Tony West, assistant attorney general for the Justice Department’s civil division, who announced the settlements Tuesday.
The practice of inflating the benchmark, known as the Average Wholesale Price, was so widespread that its acronym, AWP, was said by industry insiders to mean “Ain’t What’s Paid,” West said, adding that “the only purchasers who paid the inflated, reported drug price were you, the American taxpayers.”
Since January 2009, healthcare settlements have accounted for more than $5 billion out of $9 billion recovered in fraud cases of all kinds brought by federal prosecutors, West said.
In Tuesday’s settlements, Roxane Laboratories of Columbus, Ohio, also known as Boehringer Ingelheim Roxane Inc., agreed to pay $280 million for allegedly reporting false prices on generic drugs including painkillers, a diuretic and an immunosuppressant.
The company “at all times complied with laws, regulations and customary industry practices,” a spokeswoman said in a statement, and settled the case to avoid further legal costs.
Abbott Laboratories, of North Chicago, Ill., agreed to pay $126.5 million to settle accusations that it charged the government inflated prices for products ranging from sterile water and saline solution to the antibiotic vancomycin.
An Abbott spokesman said the company believed “that we have complied with all laws and regulations” and settled the case to avoid “the uncertainty associated with continued litigation.”
Abbott paid $614 million in civil and criminal penalties in 2003 to end a federal investigation of the company’s marketing practices and Medicaid and Medicare reimbursements.
B. Braun Medical Inc. of Bethlehem, Pa., agreed to pay $14.7 million for allegedly overcharging for 49 drug products. Braun also said in a statement that it settled the case to avoid legal costs and denied any wrongdoing.
Bruce Japsen of the Chicago Tribune contributed to this report.
