December 8, 2010

Hefty Fine Given To Drug Companies In Price Scam

Three pharmaceutical companies charged with reporting inflated drug prices to the US government have agreed to pay 421 million dollars in fines, according to officials on Tuesday.

The US Justice Department said the three companies -- Abbott Laboratories, Roxane Laboratories, and German drug maker Braun Medical Inc -- all agreed to pay the fines.

The companies are accused of falsely inflating the prices of the drugs reimbursed by the federal government under the Medicare and Medicaid health care programs for elderly and low-income Americans.

The companies were charged with "offering their customers one price and then falsely reporting a greatly inflated price to the lists the government uses when determining how much to pay for the drugs," Tony West, Assistant Attorney General for the Justice Department's Civil Division, told AFP.

The fraud led to the government overpaying reimbursements totaling hundreds of millions of dollars, officials said.

"Pharmaceutical companies created an incentive for the purchase of their drugs, since buyers could obtain government payment at the inflated price and pocket the difference," said West.

Authorities said they have recovered the overcharges and more in settlements with the three companies over the illegal pricing schemes.

Officials said they have reclaimed more than 9 billion dollars in false claims since January 2009. About half of the reclaimed funds came from fraud related to federal health care programs.

"Taxpayer-funded kickback schemes like this not only cost federal health care programs millions of dollars, they threaten to undermine the integrity of the choices health care providers make for their patients," West said.


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