Abbott’s Vancomycin “Spread” Is Target Of DoJ Suit
This article was originally published in The Pink Sheet Daily
Executive Summary
Ven-A-Care suit, taken up by Department of Justice, alleges Medicare and Medicaid paid an excess of $75 mil. for the antibiotic.
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The Department of Justice's complaint charging Abbott with inflating prices of generic vancomycin cites internal documents noting that Abbott modified the spread in response to customer complaints. The DoJ announced May 18 that it would join a civil False Claims Act suit - filed by Ven-A-Care in March in Miami, Fla. - which it recently unsealed. The government will file an amended complaint at a later date, DoJ said. The Ven-A-Care complaint alleges Abbott deliberately manipulated prices of vancomycin between 1989 and 2001, leading Medicare and Medicaid to pay an excess of $75 mil. for the drug. "Abbott documents…confirm its knowledge that [direct prices] it reported directly impacted the [average wholesale price]," which generally reflected an 18.75% mark-up of the DP, the complaint asserts. The document points to an April 26, 1995 memo that stated "[h]aving a published [DP] that is high allows a provider to bill at that list price." According to the suit, Abbott adjusted reported prices for vancomycin in several instances in response to customer complaints about a decrease in the spread. For example, in March 1995, the company reported a DP of $15 and an AWP of $17.81, the document notes. After receiving "numerous complaints," the firm reported a new per unit DP of $32.95, leading the revised AWP to rise to $39.13, the suit alleges. Later in the month, the firm again raised the DP to $52.94, causing the AWP to rise to $62.86. "Thereafter, Abbott reported higher vancomycin DPs and AWPs...each year, despite decreases in its actual prices to" customers, the document maintains. The suit also maintains the firm similarly reported false pricing for its large volume parenterals. In total, Abbott "reported prices that were more than 10 times (1000%) the actual sales prices on many of the drugs it manufactures" and Medicare and Medicaid "have reimbursed Abbott's customers in excess of $175 mil. for the drugs which are the subject of the complaint," DoJ said in a release. The suit is seeking treble damages under the False Claims Act in addition to civil penalties, disgorgement of illegal profits obtained by Abbott, and compensatory and punitive damages, plus interests, costs and expenses. DoJ settled a similar suit with GlaxoSmithKline last fall for $150 mil. (1 (Also see "GSK Settlement Of AWP “Spread” Case Includes Pricing Audits" - Pink Sheet, 20 Sep, 2005.)). - Brooke McManus |