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Drug companies pay millions to settle FCA suits

By Phillips & Cohen LLP

December has been a significant month in terms of False Claims Act recoveries from pharmaceutical companies.

Three drug makers - Abbott Laboratories Inc., Roxane Laboratories Inc. and B. Braun Medical Inc. - agreed to pay $421 million to settle claims that they defrauded federal health care programs by inflating the price of their drugs.

Drug companies are required to report the Average Wholesale Price of their products to the government and that figure is used to set reimbursement by Medicare, Medicaid and other programs.

In the case of these companies the actual price was often a fraction of the reported price, the government alleged, allowing doctors and pharmacists to pocket the difference. The practice amounted to "a kickback scheme funded by taxpayer dollars," said Assistant Attorney General Tony West. The Justice Department said abuse of the Average Wholesale Price was rife within the industry.

But it's not the only drug industry practice that is costing taxpayers millions of dollars.

On the same day that the settlements with those three manufacturers was announced, the Justice Department also announced an unrelated $41 million settlement with Abbott subsidiary Kos Pharmaceuticals Inc. on charges that it paid kickbacks to doctors and other health professionals to encourage them to prescribe or recommend the cholesterol drugs Advicor and Niaspan.

And only a week later came news of another settlement: Irish pharmaceutical manufacturer Elan Corporation and its U.S. subsidiary Elan Pharmaceuticals Inc. agreed to pay more than $203 million to resolve criminal and civil charges that they illegally promoted the epilepsy drug Zonegran.

The drug had received FDA approval for the treatment of partial epileptic seizures in adults over the age of 16. Elan promoted the sale of Zonegran for a wide variety of improper off-label uses including mood stabilization for mania and bipolar disorder, migraine headaches, chronic daily headaches, eating disorders, obesity/weight loss and seizures in children under the age of 16.

"Off-label promotion of pharmaceutical products undermines the FDA?s important role in protecting the American public by determining whether a drug is safe and effective for a particular use before it is marketed," said Tony West, Assistant Attorney General for the Civil Division. "Such illegal conduct by pharmaceutical companies also costs the government billions of dollars, and these civil settlements and the criminal plea agreement by Elan demonstrate that such conduct will not be tolerated."

Full post as published by False Claims Act - Qui Tam on December 20, 2010 (boomark / email).