AmerisourceBergen pays $625 million in oncology repackaging scheme

by Ben Vernia | October 17th, 2018

On October 1, the Department of Justice announced that AmerisourceBergen Corp. has agreed to pay $625 million to resolve civil allegations, originally brought by whistleblowers in three qui tam suits, that the company had illegally repackaged oncology drugs. The company’s subsidiary previously had pleaded guilty on related criminal charges. According to DOJ’s press release:

The Department of Justice announced today that AmerisourceBergen Corporation and its subsidiaries AmerisourceBergen Specialty Group (ABSG), AmerisourceBergen Drug Corporation (ABDC), Oncology Supply Company (OSC), and Medical Initiatives Inc. (MII) (collectively, “ABC”) have agreed to pay $625 million to resolve allegations arising from its operation of a facility that improperly repackaged oncology-supportive injectable drugs into pre-filled syringes and improperly distributed those syringes to physicians treating vulnerable cancer patients.  ABC is one of the nation’s largest wholesale drug companies and ranked number 11 on the Fortune 500 list.  The drugs involved in ABC’s scheme were Procrit®, Aloxi®, Kytril® and its generic form granisetron, Anzemet® and Neupogen®.

Last year, AmerisourceBergen Specialty Group, a wholly-owned subsidiary of AmerisourceBergen Corporation, pled guilty to illegally distributing misbranded drugs and agreed to pay $260 million to resolve criminal liability for its distribution of these drugs from a facility that was not registered with the Food and Drug Administration (FDA).  The settlement announced today resolves ABC’s civil liability to the United States under the False Claims Act for causing false claims for the drugs it repackaged to be submitted to federal health care programs.

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The United States contends that ABC sought to profit from the excess drug product or “overfill” contained within the original FDA-approved sterile vials for these cancer supportive injectable drugs by establishing a pre-filled syringe program through a subsidiary that it claimed was a pharmacy.  The United States alleged that the “pharmacy” was in reality a repackaging operation that created and shipped millions of pre-filled syringes to oncology practices for administration to cancer-stricken patients.  As part of this operation, ABC purchased original vials from their respective manufacturers, broke their sterility, pooled the contents, and repackaged the drugs into pre-filled syringes.

The United States alleged that ABC never submitted any safety, stability, or sterility data to the FDA to show that its operation ensured the safety and efficacy of the repackaged drug products.  It further alleged that, at times, these pre-filled syringes were prepared in non-sterile conditions, contaminated with bacteria and other unknown particles, and lacked the required quality and purity.

In addition, by harvesting the overfill, ABC was able to create more doses than it bought from the original vial manufacturers.  The United States alleged that ABC’s scheme enabled it to bill multiple health care providers for the same exact same vial of drug, causing some of those providers to bill the Federal Health Care Programs for the same vial more than once.  The scheme also allegedly enabled ABC to increase its market share by offering various product discounts, which it leveraged to obtain new customers and to keep existing customers buying its entire portfolio of oncology drugs.

The settlement also resolves allegations that ABC gave kickbacks to physicians to induce them to purchase Procrit through the pre-filled syringe program.  The alleged kickbacks were in the form of general pharmacy credits provided to customers, but which were not identifiable as specific to Procrit on the invoice.

Through these actions, the United States contended that ABC caused false claims to be submitted to the Centers for Medicare and Medicaid Services (“CMS”), the Department of Defense’s Defense Health Agency, which administers TRICARE, the Office of Personnel Management, which administers the Federal Employees Health Benefit Program, and the United States Department of Veterans Affairs (collectively, the “Federal Healthcare Payors”). Under the terms of today’s settlement, ABC will pay $581,809,006 plus accrued interest to the federal government and $43,190,994 plus accrued interest to state Medicaid programs.

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DOJ announced that the relators will share in a combined $93,089,441 payment (a 16% relators’ share of the federal portion of the settlement).

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