In a recent announcement, the Department of Justice disclosed that AmerisourceBergen Corporation and several of its subsidiaries (collectively “ABC”) have agreed to pay $625 million in civil penalties to resolve False Claims Act allegations arising from its operation of a repackaging operation that ABC claimed was a pharmacy. The $625 million is on top of last year’s separate criminal settlement for $260 million for ABC’s distribution of the drugs from a facility that was not registered with the Food and Drug Administration.
The scheme was fully described in our Client Alert issued exactly one year ago today, “AmerisourceBergen Agrees to Pay $260 Million for Mislabling Oncology Drugs.” In essence, however, the plot involved breaking open sterile drug vials and creating pre-filled syringes with a number of different drugs, including, Procrit®, Aloxi®, Kytril® and its generic form Granisetron, Anzemet® and Neupogen®. ABC then resold the syringes to oncology practices, and, in addition, harvested any “overfill” in order to create even more doses. In this manner, ABC was able to bill multiple health care providers for the exact same vial of drug. Through this and other actions, several whistleblowers alleged that ABC caused false claims to be submitted to a number of federal health care programs, including CMS, TRICARE, and the Federal Employees Health Benefit Program.
Further, in the process of creating the syringes, the whistleblowers and the government alleged that ABC performed the operation in non-sterile conditions, contaminating the doses with bacteria and other unknown particles and substances. Millions of the syringes were shipped from the repackaging facility in Alabama.
“The $885 million combined civil and criminal resolution with ABC underscores our determination to utilize all tools at our disposal to pursue illicit schemes that seek to profit from circumvention of important safeguards designed to protect the nation’s drug supply,” said Assistant Attorney General Joseph H. Hunt of the Department of Justice’s Civil Division. “We will continue to be particularly vigilant where these schemes put the health and safety of vulnerable patients at risk.”
“ABC placed corporate profits over patients’ needs, endangering the health of vulnerable cancer patients,” stated United States Attorney Donoghue. “This settlement, and the substantial penalty ABC has agreed to pay, reflect this Office’s firm commitment to protecting those in need of healthcare and holding to account those who put the health and safety of patients at risk.”
As described in the DOJ’s statement, the settlement resolves allegations contained in three separate actions filed against ABC under the whistleblower provisions of the False Claims Act. In this case, the three whistleblowers, including a former chief operating officer of AmerisourceBergen Specialty Group, will share approximately $93 million.