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The AP (12/7, Caldwell) reported Abbot Laboratories Inc., B. Braun Medical Inc., and Roxane Laboratories Inc. "agreed to pay more than $421 million to settle allegations that the companies reported inflated prices for numerous products," according to the Justice Department. Assistant Attorney General Tony West said the companies "inflated the average wholesale price for dozens of their products, including powerful antibiotics, used by Medicare and Medicaid patients. They reported these inflated prices to published national pricing lists used by the government to determine what it will pay doctors and druggists who provided those drugs to their Medicare and Medicaid patients." In turn "doctors and druggists were able to obtain the drugs at one price, be reimbursed by the government at an inflated price and pocket the difference."

Bloomberg News (12/8, Blum, Voreacos) reports, "Abbott Laboratories and two other drugmakers agreed to pay $421.2 million to settle claims they overcharged the US for medicines, the Justice Department said." Specifically, "Boehringer Ingelheim GmbH's Roxane Inc. will pay $280 million, Abbott will pay $126.5 million and B. Braun Melsungen AG will pay $14.7 million." The "settlements resolve civil claims that the companies inflated the average wholesale prices for drugs reported to the federal health programs Medicare and Medicaid."

AFP (12/8) reports, West "said the companies were guilty of '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.'" According to officials, "the fraud led to the government overpaying reimbursements by hundreds of millions of dollars."

West said in the Los Angeles Times (12/8, Zajac) the price differences "amounted to kickbacks to the companies' customers." He called the inflation practice "so widespread that its acronym, AWP, was said by industry insiders to mean 'Ain't What's Paid,'" adding "the only purchasers who paid the inflated, reported drug price were you, the American taxpayers." All three companies maintained compliance with laws and regulations.

Integrity of patient-care threatened. The Wall Street Journal (12/8, Catan) adds that West said, "Not only did this practice cost our public health-care programs millions of dollars, it also threatened to undermine the integrity of the choices health care providers made for their patients." The Journal goes on to add the cases were originally filed as whistleblower suits by Ven-a-Care. Under the False Claims Act, the government joined the suit, allowing the Florida-based company to partake in any recovered profits.

The Boston Herald (12/8, Kronenberg) reports, "Prosecutors say the three firms overcharged the government by providing false information to the 'Average Wholesale Price' list, a database of drug costs that Medicare and Medicaid used to use when reimbursing doctors and pharmacies." West said "the alleged scam not only cost the government money, but also gave doctors and pharmacies incentives to prescribe certain drugs whether appropriate or not. Authorities also say the higher prices stuck poor and elderly patients with inflated drug co-pays."

Abbott subsidiary settles kickback suit. In related coverage, the AP (12/7) reported Kos Pharmaceuticals, "a subsidiary of Abbott Laboratories has agreed to pay more than $41 million to settle allegations that it paid illegal kickbacks to get doctors, physician groups and managed care organizations to prescribe or recommend two of the company's drugs, Advicor and Niaspan."

From the American Association for Justice news release.