Abbott settles inflated drug price case with feds

By Reuters
Posted Dec. 7, 2010 at 12:33 p.m.

Abbott Laboratories and two other drugmakers will pay $421 million to settle allegations that they falsely inflated product prices to gain larger government reimbursement payments, the U.S. Justice Department said Tuesday.

Abbott’s share of the settlement is $126.5 million for violations of the False Claims Act involving pricing of two antibiotics and agents used to facilitate intravenous infusions of other drugs, the Justice Department said.

The settlement resolves claims that the companies falsely reported higher prices for its drugs, which the government depended upon in determining Medicare and Medicaid payment rates. The actual sales prices were far less than what defendants reported, the government said.

Assistant Attorney General Tony West, who is in charge of the Justice Department’s Civil Division, called the practice ”essentially a kickback scheme funded by the taxpayers.”

In the other settlements, Roxane Laboratories, which is affiliated with privately held German drugmaker Boehringer Ingelheim, agreed to pay $280 million for inflating prices on several of its pharmaceutical products.

B. Braun Medical, a unit of Germany’s B. Braun Melsungen AG, agreed to pay $14.7 million for causing the Medicaid program to pay inflated amounts on dozens of its products.

Wilfredo Ferrer, the U.S. attorney in Miami, said Abbott fraudulently inflated its prices for various products, knowing that it would cost the government “many millions of dollars” and result in the company reaping “huge profits.”

He said the government essentially “footed the bill for Abbott’s marketing budget.”

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