Global Processing

Abbott accused of inflating drug prices

May 23, 2006

The Justice Department is accusing Abbott Laboratories of vastly inflating prices of its drugs as part of a fraudulent billing scheme alleged to have cost government health programs more than $175 million over 10 years, the Associated Press reports. Abbott bumped up the reported price of the intravenous antibiotic vancomycin as much as 18 times what it charged health care providers, knowing that the Medicare and Medicaid programs would reimburse the providers based on the manufacturer''s price, according to a whistleblower lawsuit unsealed last Thursday. Based in North Chicago, Ill., Abbott participated in such a billing scheme because hospitals, pharmacies and other providers would get to pocket the difference and would be more likely to prescribe the company''s products again, the Justice Department contended. Other Abbott water-based solutions used in administering IV drugs and to replace fluids in the body also were part of the arrangement, the department said. The lawsuit is the latest in a series of whistleblower claims against drug manufacturers. Settlements in other cases have totaled more than $3.1 billion in recent years. The lawsuit originally was filed by Ven-A-Care of the Florida Keys Inc., a small home-infusion company that has won several lawsuits that made similar allegations against other drugmakers. The company would get a portion of any settlement, as allowed under the federal False Claims Act. A pricing scheme was in place from 1991 to 2001, according to the lawsuit. During that time, TAP Pharmaceuticals, an Abbott joint venture, paid $875 million to resolve price-fraud allegations in connection with its Lupron cancer drug. Abbott began reporting new, lower prices and the so-called spread, the gap between reported and actual sales prices, narrowed, the Justice Department said.