Drug and DME Pricing

December 3, 2014

Rite Aid Corporation agreed to pay $3M to resolve allegations it violated the False Claims Act by offering illegal inducements to Medicare and Medicaid beneficiaries to transfer their prescriptions to Rite Aid pharmacies. The government alleged that from 2008 to 2010, Rite Aid had improperly influenced the decisions of Medicare and Medicaid beneficiaries to transfer their prescriptions to Rite Aid pharmacies by offering them gift cards in exchange for their business. The charges originated in a whistleblower complaint filed by Jack Chin under the qui tam provisions of the False Claims Act. Chin will receive a whistleblower award of approximately $500,000. DOJ

December 2, 2013

Caremark agreed to pay $4.25M to settle allegations that it knowingly failed to reimburse Medicaid for prescription drug costs paid on behalf of Medicaid beneficiaries, who also were eligible for drug benefits under Caremark-administered private health plans. The allegations were first raised in a qui tam lawsuit filed under the whistleblower provisions of the False Claims Act. DOJ

November 4, 2015

The federal government, District of Columbia, and 48 states, settled claims against AstraZeneca LP and Cephalon, Inc., for a total of $54 million. The settlement resolves allegations that AstraZeneca and Cephalon under-paid drug rebates owed to the states. Under the federal law known as the Medicaid Drug Rebate Program, drug manufacturers must periodically return a portion of the amount paid by state Medicaid programs for the manufacturers’ drugs. The rebate program is designed to ensure that states pay competitive prices for drugs, and is calculated based on a percentage of the average price drug wholesalers pay for the manufacturers’ drugs. This average price, which the manufacturer reports to the federal government, is known as the Average Manufacturer’s Price or “AMP.” The greater the AMP reported by the manufacturer, the greater the rebate the manufacturer must pay. NY; MA; NH

October 16, 2014

Texas Attorney General Greg Abbott entered into a settlement with generic drug maker Ranbaxy Pharmaceuticals, Inc., Ranbaxy Laboratories, Inc., Ranbaxy USA, Inc. and Ranbaxy, Inc. to resolve allegations they violated the Texas Medicaid Fraud Prevention Act by fraudulently reporting inflated drug prices to the Medicaid program. Under the settlement, Ranbaxy must pay the State of Texas about $18M. TXAG

July 28, 2014

Vascular Solutions Inc (VSI), a Minneapolis-based medical device maker, agreed to pay $520,000 to resolve allegations that it violated the False Claims Act by marketing a product for sealing veins without FDA approval.  Specifically, the government charged that VSI marketed and sold its "Vari-Lase Short Kit" for treating perforator veins (which run deep in the leg muscle) even though the FDA approved the device only for treating surface (or superficial) veins.  DeSalle Bui, a former sales representative of VSI, will receive a whistleblower award in an undisclosed amount.  DOJ