Thursday, April 28, 2005

Steep discounts by pharmaceutical companies draw scrutiny

Federal and state officials are questioning discounts of 90 percent and more given by drug companies to certain customers, but not to Medicaid.

Federal law requires that Medicaid receive the best price offered to any customer, but makes an exception for drugs sold at a discount of 90 percent or more. It was supposed to allow charitable organizations to purchase inexpensive medicines but drug companies have been using the exception to increase their market share at certain hospitals.

The Pittsburgh Post-Gazette reprinted an April 28, 2005 Wall St. Journal article stating that two lawsuits have been filed against Merck, one of them still under seal, alleging improper discounting. A United States Dept. of Justice subpoena issued to GlaxoSmithKline seeks information on that firm's discounting practices. The Senate committee that oversees Mediaid is also questioning drug companies on their nominal-pricing practices.

In the unsealed case against Merck, Nevada's attorney general joined a complaint filed by a former Merck employee, alleging that the company promised hospitals a 92 percent discount on Zocor if it had a 70 percent share of their cholesterol-lowering prescriptions.

Federal contractor settles fraud charges for $2.5 million

Science Applications International Corp. will pay $2.5 million to to settle a lawsuit alleging the company defrauded the Air Force by padding its bills on $24 million in contracts.

The suit was originally filed by a former SAIC manager as a qui tam whistle-blower lawsuit under the federal False Claims Act. The manager claimed that the company reaped profits in excess of the allowed 10 percent by falsely inflating its labor costs on environmental testing and cleanup work at Kelly Air Force base in Texas.

The Washington Post ran an April 28, 2005 story on the settlement.

Tuesday, April 26, 2005

Analysts suspect biotech company Serono is preparing to settle federal investigations

Serono, Europe's biggest biotechnology company, has set aside $725 million, suggesting that it is preparing to pay a large settlement in a government investigation.

The company has disclosed its compliance with government subpoenas for information on its marketing of the AIDS drug Serostim. But indictments this month in Boston revealed that the government was also investigating a kickback scheme.

Analysts say that the fact the company took the charge indicates that a settlement is expected soon.

The New York Times (subscription required) reported on these developments on April 23, 2005.

Boston Globe reports rise in whistle-blower suits against drug companies

The April 22, 2005 edition of the Boston Globe says that federal prosecutors in that city report a sharply rising rate of whistle-blower suits against drug companies.

The success of suits such as the one brought against TAP Pharmaceuticals by a former company salesman has encouraged other indiviuals who discover fraud against the government to pursue False Claims Act suits.

The article by Ross Kerber is available to subscribers at the Globe's website.

Monday, April 18, 2005

Kaiser will pay $1.9 million in healthcare billing suit

Kaiser Permanente Hawaii has agreed to pay $1.9 million to settle charges of inaccurate Medicare and Medicaid claims, the Honolulu Star-Bulletin reported on April 15, 2005.

The lawsuit, which was brought by a Kaiser employee under the qui tam provisions of the False Claims Act, alleged that from 1984 to 2001 Hawaii's largest health maintenance organization billed Medicare and Medicaid for services performed by a dermatology employee who did not have a state physician's assistant license.

Thursday, April 14, 2005

New York City mayor and council to revise vetoed false claims bill

New York City Mayor Michael Bloomberg and members of the City Council are attempting to draft a compromise version of a bill vetoed by the Mayor on March 14, 2005. The bill would create a city False Claims Act. It would mirror the federal act by allowing whistleblowers who pursue civil actions on behalf of the city to be awarded a relator's share of between 15 and 30 percent of the city's recovery.

The City Council's Governmental Operations Committee has issued a report on the bill, whose text is available at the council's site. It is bill number 346 for 2004.

University of Alabama settles false billing suit

The University of Alabama at Birmingham will pay the federal government $3.39 million to settle allegations of false billing in its health science research activities from 1996 through last year.

The suit was the result of allegations brought by two whistleblowers who proceeded under the qui tam provisions of the False Claims Act.

The government alleged that UAB overstated the percentage of work effort that the researchers were able to devote to a National Institutes of Health grant and unlawfully billed Medicare for clinical research trials that were also billed to the sponsor of research grants.

The Tuscaloosa News ran an April 14, 2005 story on the settlement.

Tuesday, April 12, 2005

Drug wholesalers investigated by NY AG

New York State Attorney General Eliot Spitzer is apparently investigating three large drug distributors for information on their purchases of drugs from other wholesalers rather than directly from the pharmaceutical companies. Sources speculate that counterfeit drugs may be one area of concern.

AmeriSourceBergen, Cardinal Health, and McKesson Corphave received subpoenas for information on the secondary wholesale market.

Modern Healthcare reported on these developments on April 11, 2005 (subscription required).

NY AG calls for state False Claims Act

New York Attorney General Eliot Spitzer announced that the state's Medicaid Control Unit recovered more than $65 million in 2004 and renewed his call for passage of the proposed New York State False Claims Act.

The recovery level was the highest in the unit's 29-year history.

The AG's press release was posted April 12, 2005.

Florida AG sues 3 pharmaceutical companies for overbilling

The Florida Attorney General has sued three pharmaceutical manufacturers for wrongfully inflating the prices charged to Florida's Medicaid program, resulting in a loss to the state's taxpayers of approximately $25 million.

The three companies – Sandoz, Inc., Ivax Pharmaceuticals, Inc., and Purepac Pharmaceutical Company, along with various parent and subsidiary companies – were sued for violations of the Florida False Claims Act and common law fraud. The lawsuit alleges that the companies overstated the prices of generic drugs to gain higher reimbursements than were justified.

The AG Office's press release is available at their site.

Feds seek records from dialysis firm

Fresenius Medical, the world's largest provider of kidney dialysis, received a subpoena from the U.S. Attorney in St. Louis. The subpoena seeks records from December 1996 forward concerning the company's relationships with doctors.

The government is conducting a civil and criminal probe of the company. Federal scrutiny of billing practices at other dialysis centers is continuing.

Bloomberg ran an April 6, 2005 story on the probe.

Saturday, April 02, 2005

Justice Dept. says Iraq fraud can be tried in U.S.

The United States Dept. of Justice has filed a brief arguing that fraud claims arising from contracts issued in Iraq can be tried in federal courts in this country.

A lawsuit involving alleged fraud by contractor Custer Battles was filed by private whistleblowers in U.S. District Court for the Eastern District of Virginia. Lawyers for the defendant have argued that the case should be dismissed because the contract was paid using Iraqi funds and was administered by the U.S.-led Coalition Provisional Authority.

The government has not joined the suit, which the whistleblowers brought under the qui tam provisions of the False Claims Act.

The Los Angeles Times reported on these developments on April 2, 2005.