Government Joins Whistleblower Case Against Pharmaceutical Firm for Overcharging on Generic Drugs

We saw another significant whistleblower case against a drug company hit the news wire this week.

The government announced that it was joining a qui tam lawsuit under the False Claims Act against the company Boehringer Ingelheim Roxane, Inc. The Complaint alleges overcharging on pharmaceutical products.

In joining this lawsuit, the United States has alleged that the drug company engaged in a “scheme to report fraudulent and inflated prices for several pharmaceutical products, knowing that federal health care programs established reimbursement rates based on those reported prices.”

We have reprinted the government’s announcement of why it is joining this qui tam whistleblower lawsuit below (from the U.S. Department of Justice press release):



Firm Allegedly Overcharged Medicare, Medicaid
WASHINGTON – The United States has intervened in a whistleblower suit filed in the District of Massachusetts against Boehringer Ingelheim Roxane, Inc. and various related entities, alleging that Roxane violated the False Claims Act, the Justice Department announced today. In its complaint, the government alleges that Columbus, Ohio-based Roxane engaged in a scheme to report fraudulent and inflated prices for several pharmaceutical products, knowing that federal health care programs established reimbursement rates based on those reported prices.

The government’s complaint alleges that the Ohio pharmaceutical manufacturer, from at least on or before January 1, 1996, reported prices that, in some instances, were more than 1,000 percent the actual sales prices on certain of the drugs it manufactures. The United States alleges that Medicare and Medicaid have reimbursed Roxane’s customers in excess of $500 million for the drugs which are the subject of the complaint. Roxane sells generic drugs that are reimbursed by the two federal health care programs.

The difference between the inflated government reimbursement rates and the actual price paid by healthcare providers for a drug is referred to as the “spread.” The larger the spread on a drug, the larger the profit or return on investment for the provider. The government alleges that Roxane used artificially inflated spreads to market, promote and sell the drugs to existing and potential customers. Because reimbursement from federal programs was based on the fraudulent inflated prices, the United States contends that Roxane caused false and fraudulent claims to be submitted to federal healthcare programs.

“Fraudulent pricing practices in the pharmaceutical industry have provided illicit profits for pharmaceutical manufacturers and providers at the expense of the taxpayer,” said Peter D. Keisler, Assistant Attorney General for the Civil Division. “Our intervention in this lawsuit is another example of our ongoing effort to combat these practices and hold its perpetrators accountable for their misdeeds.”

The investigation began after the filing of a False Claims Act suit by a Florida home-infusion company, Ven-A-Care of the Florida Keys Inc., and its principals. The False Claims Act allows for private persons to file whistleblower suits to provide the government information about wrongdoing. Under the statute, if it is established that a person has submitted or caused others to submit false or fraudulent claims to the United States, the government can recover treble damages and $5,500 to $11,000 for each false or fraudulent claim filed. If the government is successful in resolving or litigating its claims, the whistleblower who initiated the action can receive a share of between 15 percent and 25 percent of the amount recovered.

The lawsuit, called a qui tam action, was filed in the U.S. District Court for the District of Massachusetts. The case was assigned to U.S. District Court Judge Morris E. Lasker in Boston. This investigation was conducted by the U.S. Department of Justice, the U.S. Attorney’s Office for the District of Massachusetts, and the Office of Inspector General of the Department of Health and Human Services.

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