Bloomberg News

Actavis Will Pay $118.6 Million to End Drug-Pricing Claims

January 06, 2012

(Updates with lawyer’s comments in seventh paragraph.)

Jan. 4 (Bloomberg) -- Units of Actavis Group Hf agreed to pay $118.6 million to resolve claims that they caused the U.S. and four state governments to overpay for drugs.

The settlement, filed Dec. 29 in federal court in Boston, followed an $84 million accord announced a day earlier in a lawsuit by the state of Texas, bringing the total to $202.6 million. In February, a state court jury in Austin ordered units of the Iceland-based company to pay $170 million for inflating billings to the Texas Medicaid program.

In the larger accord, Actavis settled with the U.S., New York, Florida, South Carolina and Iowa. The U.S., Florida and Texas cases were filed by Ven-A-Care of the Florida Keys Inc., a specialty pharmacy which prosecuted them civilly.

Ven-A-Care sued under the U.S. False Claims Act and similar statutes in Florida and Texas, which lets whistle-blowers sue on behalf of the government and share in any recovery. The states pursued their cases separately.

Gerard Farrell, a spokesman for Actavis Inc., the U.S. unit based in Morristown, New Jersey, had no immediate comment on the settlement.

Ven-A-Care settled more than 20 lawsuits since 2000 that allowed state and federal governments to collect about $3 billion. Ven-A-Care collected more than $400 million in whistle- blower fees during that period.

“Ven-A-Care is pleased to have resolved all of its matters with the Actavis group of companies,” said its attorney, James Breen.

Inflated Prices

Ven-A-Care claimed that Actavis defrauded the U.S. and state governments by falsely reporting inflated prices of drugs. Actavis knew that the governments would use those false reports to set higher reimbursement rates for Medicaid, Ven-A-Care claimed. Actavis denied wrongdoing in the settlements.

The Justice Department didn’t join the case, although it recovered $108 million. Between the two cases, Ven-A-Care collected $15.6 million, court records show.

“The U.S. declined to intervene, which means the Justice Department didn’t invest any resources in the case,” Breen said. “Ven-A-Care and its legal team funded and pursued the case, took all the risks, and will return over $108 million to the federal government. That’s exactly the way the False Claims Act is supposed to work.”

The case is In re Pharmaceutical Average Wholesale Price Litigation, MDL No. 1456, U.S. District Court, District of Massachusetts (Boston). The Texas case is State of Texas Ex. Rel. Ven-A-Care of the Florida Keys Inc., D-1-GV-08-1566, Texas District Court, Travis County (Austin).

--Editors: Peter Blumberg, Fred Strasser

To contact the reporters on this story: David Voreacos in Newark, New Jersey at dvoreacos@bloomberg.net; Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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