Department Of Justice Joins Lawsuit Alleging Abbott Laboratories Inflated Drug Prices For Medicare, Medicaid Beneficiaries

Main Category: Medicare / Medicaid / SCHIP
Article Date: 22 May 2006 - 10:00 PDT

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The Department of Justice on Thursday joined a whistleblower lawsuit filed over allegations that Abbott Laboratories between 1991 and 2001 inflated the prices of its products to allow hospitals to receive higher Medicare and Medicaid reimbursements, the Wall Street Journal reports. The products were sold by Abbott's Hospital Products Division, which was spun off as Hospira in 2004. Hospira also is named in the suit (Carreyrou, Wall Street Journal, 5/19). The lawsuit was filed in 1995 by Ven-A-Care, a small Florida pharmacy that has participated in other, similar lawsuits (Dorschner, Miami Herald, 5/19). According to the lawsuit, drug prices reported to the Drug Topics Red Book and other pricing sources in some cases were 1,000% higher than prices charged to providers (Wall Street Journal, 5/19). For example, Abbott increased the reported price of vancomycin, an intravenous antibiotic, to as high as 18 times what it actually charged health care providers, the lawsuit alleges (AP/Los Angeles Times, 5/19). According to the Journal, inflated prices would have given doctors and hospitals an opportunity to "reap big profits" by prescribing Abbott's drugs, thus encouraging the use of Abbott drugs and increasing profits for the company (Wall Street Journal, 5/19). Overall, CMS paid more than $175 million for Abbott's products during the period in question, according to DOJ (Appleby, USA Today, 5/19). DOJ said that under the False Claims Act it can recover three times the amount of damages assessed by a jury, in addition to $5,500 to $11,000 for each fraudulent reimbursement (Wall Street Journal, 5/19).

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Assistant Attorney General Peter Keisler said the "complaint marks another step in the government's investigation and prosecution of pharmaceutical manufacturers who submit fraudulent drug-pricing information." Abbott spokesperson Melissa Brotz said the company has followed all laws and regulations and will defend itself against the lawsuit (USA Today, 5/19). A Hospira spokesperson said the company consistently adhered to pricing laws and noted that the company did not exist when the alleged price inflation occurred (Wall Street Journal, 5/19).

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