Dey settles pharma pricing allegations for $280 million in Florida whistleblower's case

by Ben Vernia | December 20th, 2010

The Department of Justice announced on December 20 that the pharmaceutical maker Dey has agreed to pay $280 to settle claims that it reported inflated drug pricing data for four of its drugs, causing federal health care programs to pay too much. According to DOJ’s press release

Dey Inc., Dey Pharma L.P. (formerly known as Dey, L.P.) and Dey L.P. Inc. have agreed to pay $280 million to settle False Claims Act allegations, the Department of Justice announced today. This settlement resolves claims by the United States that the defendants engaged in a scheme to report false and inflated prices for numerous pharmaceutical products, knowing that federal health care programs relied on those reported prices to set payment rates. The actual sales prices for the Dey products were far less than what Dey reported.

The United States alleged that Dey reported false prices for the following drugs: Albuterol Sulfate, Albuterol MDI, Cromolyn Sodium and Ipratropium Bromide. The difference between the resulting inflated government payments and the actual price paid by health care providers for a drug is referred to as the “spread.” The larger the spread on a drug, the larger the profit for the health care provider or pharmacist who is reimbursed by the government. The government alleges that Dey created artificially inflated spreads to market, promote and sell the drugs to existing and potential customers. Because payment from the Medicare and Medicaid programs was based on the false inflated prices, the government alleged that Dey caused false and fraudulent claims to be submitted to federal health care programs and, as a result, the government paid millions of claims for far greater amounts than it would have if Dey had reported truthful prices.

This is the fourth such settlement with pharmaceutical manufacturers that the Department of Justice has announced this month. On Dec.7, 2010, the Department announced settlements totaling $421.1 million involving similar allegations against three other manufacturers: Abbott Laboratories Inc., B. Braun Medical Inc. and Roxane Laboratories Inc.

The case was brought by Ven-A-Care of the Florida Keys – the same whistleblower as in the others settled this month. The relator will receive $67.2 million (a 24% relator’s share). Combined, the whistleblower’s share for the four cases settled in December is $155.6 million.

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