TAF Newsletter - False Claims Act - Qui Tam

The U.S. Department of Justice has joined a False Claims Act case filed by Ven-a-Care of the Florida Keys against Roxane Laboratories Inc. and Boehringer Ingelheim Pharmaceuticals for Medicaid and Medicare drug pricing violations. This federal action comes more than a year after Roxane and Boehringer paid $10 million to settle a Texas False Claims Act case alleging similar misconduct involving misrepresentations about the "Average Wholesale Price" of prescription drugs sold to Medicaid. In announcing their intervention in the case, the U.S. Department of Justice noted that "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."
     The Roxane Labs case joins a similar case against Abbott Laboratories by Ven-a-Care that the U.S. Department of Justice joined in May of 2006, and another against Dey Pharmaceuticals that the DoJ joined in September of 2006.
     Complaints against more than 40 additional companies engaged in Average Wholesale Price violations have been filed in Federal and State courts. Along with Abbott, Roxane, Dey and Boehringer Ingelheim, defendants in intervened cases include (but are not limited to): Amgen, Armour Pharmaceutical; Aventis Pharmaceuticals, Baxter Healthcare, Bedford Laboratories; Ben Venue Laboratories, Braun of America, C.H. Boehringer Sohn, Centocorps Inc., Forest Pharmaceuticals, Grundstucksverwaltung GMBH & Co., EMD, Geneva Pharmaceuticals, GlaxoSmithKline, Glaxo Wellcome, Burroughs Wellcome, Hoechst Marion Roussell, Hoffman-LaRoche, Hospria Inc., Immunex, Ivax Pharmaceuticals, Janssen Pharmaceutical Products, Johnson & Johnson, Lipha, McGaw, Merck, Mylan Laboratories, Mylan Pharmaceuticals, Novartis, Ortho Biotech Products, Pfizer, Pharmacia, Pharma Investment, PurePac Pharmaceutical, Roche Laboratories, Roxane Laboratories, Sandoz, Sicor, Gensia Pharmaceuticals, Schering-Plough Corp., SmithKline Beecham Corp., GlaxoSmithKline, Teva Pharmaceuticals, Warrick Pharmaceuticals, Z.L.B. Behring.
    While "the rock" of the U.S. Department of Justice squeezes pharmaceutical companies from one side, a potential "hard spot" can be found in the courtroom of U.S. District Judge Patti Saris who ruled in November that "Average Wholesale Price" means exactly what the dictionary says it does, and is not a "term of art" that the drug companies can unilaterally define. Judge Saris' November ruling suggests that the pharmaceutical industry may face real difficulties in her courtroom.
     Back in November, we predicted that more Average Wholesale Price cases would come to resolution in 2007, in part to avoid the high cost of courtroom failure (mandatory triple damages, plus mandatory statutory fines and exclusion). In late December, Bristol-Myers Squibb was the fist company to work out a settlement of both its AWP cases and an off-label marketing case for a combined total of $499 million. More cases are sure to follow. Stay tuned.