AmerisourceBergen to Pay $625 Million to Settle Civil Fraud Charges
One of the largest U.S. drug manufacturers, AmerisourceBergen Corp, is set to pay $625 million to settle civil fraud charges over selling unsterile syringes containing drugs for cancer patients, double billing, and providing kickbacks to physicians. The settlement was announced by the U.S. Department of Justice, and ups AmerisourceBergen’s total payout to $885 million over its repackaging and distribution of pre-filled syringes that were not approved by the U.S. Food and Drug Administration (FDA). Last year, AmerisourceBergen Specialty Group unit pleaded guilty to misdemeanor charges and paid $260 million in criminal fines and forfeitures. The company entered into a five-year corporate integrity agreement to ensure compliance with federal health care rules.
AmerisourceBergen admitted in the three-year period between January 2001 to January 2014, its Medical Initiatives Inc. pharmacy unit based in Alabama shipped millions of syringes prepared in unsanitary conditions to patients undergoing chemotherapy. According to federal authorities, AmerisourceBergen harvested “overfill” from the original vials of drugs, including Aloxi, Anzemet, Kytril and its generic, Neupogen, and Procrit.
That scheme allowed the company to create more doses than it bought, and, thus, realize $99.6 million in excess profits. It also allegedly billed multiple doctors for individual vials, causing them to bill the government more than once, and paid kickbacks to physicians so they would buy drugs through the pre-filled syringe program. Authorities accused the Medical Initiatives pharmacy subsidiary of causing numerous false claims to be submitted to Medicaid for unapproved new drugs, and for defective or compromised new drugs.
“ABC placed corporate profits over patients’ needs, endangering the health of vulnerable cancer patients,” U.S. Attorney Richard Donoghue in Brooklyn, New York, of the fraud charges.
New York Attorney General Barbara Underwood said $99.9 million of the payout will go to state Medicaid programs. “We have zero tolerance for big corporations that skirt federal and state laws to boost their profits at the expense of vulnerable individuals,” Underwood said.
Four whistleblowers including Michael Mullen, a former chief operating officer at AmerisourceBergen Specialty Group, will share $99 million from the payout.
AmerisourceBergen said the settlement is an admission that some of its past practices “were not consistent with AmerisourceBergen’s approach to corporate compliance.” It added, “Medical Initiatives was voluntarily closed in 2014 and by entering into the corporate integrity agreement now, we are confirming both our commitment to compliance and to the continual evaluation and enhancement of our already robust compliance programs.”
Besides having to settle civil fraud charges, AmerisourceBergen has been at the heart of the nation’s growing opioid epidemic as well and has not been immune to scrutiny regarding its practices affiliated with the manufacturing and distribution of opioids. Earlier this year, the Justice Department announced that it would establish a task force to crack down on opioid manufacturers and distributors and hold them accountable for illegal practices. Several major wholesalers, including AmerisourceBergen, have been subjected to the possibility of hundreds of lawsuits filed by cities and counties all over the U.S. By cracking down on AmerisourceBergen’s past practices and ensuring compliance internally, authorities can only hope it will also follow all rules and regulations regarding the manufacturing and distribution of all of its products.