Three Major Drug Firms Pay $421 Million in Settlement with Justice Department

Dec. 7, 2010 -- The Justice Department announced a $421 million settlement against three pharmaceutical companies on Tuesday for their alleged involvement in a scheme to drastically inflate the price of drugs --sometimes by a whopping 1000% -- which was reimbursed by Medicare and Medicaid and ultimately the U.S. taxpayer.

The settlements were reached in three False Claims Act cases filed against Abbott Laboratories, B. Braun Medical Inc. and Roxane Laboratories. Both B. Braun and Roxane are U.S. subsidiaries of German pharmaceutical firms. Under the settlement agreements, Abbott Laboratories agreed to pay $126.5 million in fines, B. Braun Medical agreed to pay $14.7 million, and Roxane will pay $280 million for making Medicare and Medicaid pay the allegedly inflated reimbursements.

Read about other Medicare fraud cases HERE and HERE.

The investigation into the companies' activities followed a whistleblower lawsuit filed by Ven-A-Care, a home infusion company based in southern Florida. A civil complaint against Abbott filed by Ven-A-Care in 2007 noted that Abbott was charging huge mark-ups on the price of their drugs when they sought reimbursement from the government.

The civil complaint filed by Ven-A-Care against Abbott noted, "Over the course of several years, Abbott reported inflated pharmaceutical prices that it knew Medicare and Medicaid relied upon to set reimbursement rates for Abbott's pharmaceutical products. Abbott's actual sales prices for its pharmaceutical products were far less than the prices reported by Abbott. By knowingly reporting inflated prices -- often 1000% higher than Abbott's actual prices -- Abbott ensured its customers received inflated reimbursement and profits from Medicare and Medicaid."

At a press conference in Washington on Tuesday Assistant Attorney General for the Civil Division, Tony West said, "We've alleged that these companies engaged in a complicated and complex scheme to market their drugs in an unlawful pricing arrangement that amounted to kickbacks funded for by taxpayer dollars."