Berger Montague Settles Whistleblower Lawsuit Involving AstraZeneca, Cephalon, & BioGen, Inc.; Secures $55 Million on Behalf of Taxpayers

As one of the leading and most successful whistleblower law firms in the United States, Berger Montague is pleased to announce its involvement in a $55.5 million settlement involving three major players in the pharmaceutical industry. This past July, Berger Montague announced the settlement against AstraZeneca, Cephalon, Inc., and BioGen, Inc. – three of the largest medication-makers in the world. Specifically, our law firm was integral in securing a victory on behalf of our client, who vows that his quest for victory is far from over.

The Allegations

The facts of the case involve a complex and intricate scheme in which these companies are alleged to have unlawfully benefited from the Medicaid drug rebate program. The drug rebate program is essentially a partnership between the Center for Medicare and Medicaid Services (CMS), state Medicaid offices, and private drug manufacturers.[1. http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Benefits/Prescription-Drugs/Medicaid-Drug-Rebate-Program.html]

Generally, private drug manufacturers are offered the opportunity to “enroll” their prescriptions in the Medicaid program (thereby greatly increasing the breadth of potential sales) in exchange for their agreement to offer a rebate on these covered drugs, payable to state Medicaid offices on a quarterly basis. In essence, the drug companies benefit from enrollment in the Medicaid program, while states mutually benefit from the reduced costs for taxpayers. Moreover, the federal government is also entitled to a portion of these drug rebates congruent to its proportion of reimbursement coverage.

If a drug company fails to offer the appropriate rebate amount, or shortchanges the federal and state governments, it could find itself exposed to liability under the False Claims Act.

Quarterly rebate amounts are calculated using an Average Manufacturer Price (AMP), as self-reported by each drug company for each enrolled drug. Naturally, the higher the AMP for a certain drug, the higher the rebate amount the drug company will owe to the government for that drug. Allegedly, AstraZeneca, Biogen, Cephalon were underreporting the AMPs for several of their top-selling prescription medications, thereby fraudulently reducing the amount of the rebate payable to state and federal Medicaid regulators.

More specifically, the companies are alleged to have devised a scheme wherein they sold drugs to wholesalers at a certain price and tacked on an additional “service fee” for the wholesaler to pay – which was, according to the allegations, nothing more than a fraudulent attempt to mask the true price paid by the wholesaler for the drugs. Relying on the sale price less the “service fee,” the drug companies were able to report fraudulently deflated AMPs, thus resulting in a decreased rebate.

Our Whistleblower’s Role

Our client commenced his whistleblower case after a confidential meeting with our office in 2008, when he first became aware of the potentially fraudulent misconduct. The details of his allegations are the first of their kind, as there have been no prior False Claims Act lawsuits involving similar allegations.

Accordingly, our client has vowed to continue his role in eliminating this wasteful trend. He has a concurrent lawsuit pending against the pharmaceutical company known as Genzyme, which involves similar assertions of Medicaid rebate fraud. Additionally, a federal district court recently dismissed allegations against yet another group of pharmaceutical companies, which our client plans to appeal.

Contact Berger Montague Today

In the past, if the government declined to get involved (i.e., intervene) with a whistleblower lawsuit, this typically meant the end of the litigation. However, with a law firm like Berger Montague, whistleblowers are able to continue their cases without government involvement – and this settlement marks the sixth such settlement this year.

To discuss your information with a confidential whistleblower attorney, please contact Berger Montague today.