The Justice Department has popped another pharmaceutical company for overcharging the Medicaid program. Aventis Pharmaceutical Inc., a subsidiary of Sanofi-Aventis U.S., has agreed to pay the United States $95.5 million to settle allegations that it violated the False Claims Act by misreporting drug prices to skirt its Medicaid rebate obligations, the department announced today.
The company and its corporate predecessors admitted to misreporting best prices for the anti-inflammatory nasal sprays Azmacort, Nasacort, and Nasacort AQ between 1995 and 2000. Aventis entered into “private label” agreements with the HMO Kaiser Permanente, which repackaged Aventis’ drugs under a new label. The arrangement allowed Aventis to underpay drug rebates to the Medicaid program and overcharge certain public health service entities.
The feds will recover about $49 million in the settlement. Aventis will also pay more than $40 million to the Medicaid-participating states and more than $6 million to the public health services entities that paid inflated prices.
The case was handled by the Justice Department's Civil Division, the U.S. Attorney’s Office for the District of Massachusetts, the Department of Health and Human Services’ Office of Inspector General and Office of Counsel to the Inspector General, and the National Association of Medicaid Fraud Control Units.
"We will continue to ensure that programs for the most vulnerable portions of our population do not pay any more for pharmaceutical products than they should under the law," said Tony West, head of the department’s Civil Division, in a statement.
The settlement comes about 10 days after the Justice Department announced it would join whistleblower lawsuits against pharmaceutical giant Wyeth, alleging that the company overcharged state Medicaid programs hundreds of millions of dollars through special pricing arrangements with thousands of hospitals nationwide. Fifteen states and the District of Columbia have also joined the two lawsuits, filed in U.S. District Court for the District of Massachusetts.
For more FCA fare, check out Marcia Coyle’s story this week in The National Law Journal. The law got a serious upgrade in the recently enacted Fraud Enforcement and Recovery Act of 2009. The law strengthens the hand of whistleblowers, but corporate defense and government contract lawyers expect it will be litigated heavily.