Recently, the U.S. Justice Department announced settlements with three pharmaceutical companies for a total of $421 million to settle allegations they reported “false and inflated prices” for pharmaceutical products knowing that government health care programs would use those reported prices to set payment rates. According to the Justice Department, the actual sales prices for the products were “far less” than what the companies reported. In this trio of False Claims Act qui tam settlements, Abbott Laboratories Inc. agreed to pay $126.5 million, Roxane Laboratories Inc. (n/k/a Boehringer Ingelheim Roxane Inc.) agreed to pay $280 million, and B. Braun Medical Inc., a subsidiary of Germany-based B. Braun Melsungen AG, agreed to pay $14.7 million. As part of these settlements, the whistleblowers will receive approximately $88.4 million.

In this pharmaceutical fraud scheme known as “marketing the spread,” the drug companies fraudulently created a large incentive for providers to prescribe their drugs. This “spread” is the difference between the resulting inflated government payments and the actual price paid by health care providers for a drug.  The larger the “spread” on a particular drug, the larger the profit for the provider or pharmacist. In turn, because payment from the Medicare and Medicaid programs was based on the false inflated prices, the government alleged that the defendants caused false claims to be submitted to government health care programs, and as a result, the government paid millions of claims for far greater amounts than it would have if the defendant companies had reported truthful prices.

For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, P.A.