TAP Pharmaceuticals Settles Federal Fraud Case for $875M
As expected, TAP Pharmaceutical Products Inc., a joint venture of Abbott Laboratories and Takeda Chemical Industries, yesterday settled a Medicare and Medicaid fraud case for $875 million, the largest criminal fine ever levied by the government for health care fraud, USA Today reports (Appleby, USA Today, 10/4). Under the settlement with federal prosecutors, TAP pleaded guilty to a charge of conspiracy to violate the Prescription Drug Marketing Act and also settled civil cases with the federal government, all 50 states and the District of Columbia (Lavoie AP/Philadelphia Inquirer, 10/4). Prosecutors allege that TAP "artificially inflated" the average wholesale price -- the price reported to the government and used to set Medicare and Medicaid reimbursement rates -- of the company's prostate cancer drug Lupron to "increase sales and profits." TAP allegedly sold Lupron to physicians for about $100 to $150 less per one-month dose and encouraged them to bill the government and other insurers for the larger amount. TAP also allegedly offered doctors as much as $70,000 in free drug samples and told them to "bill insurers as if they had purchased it," a violation of federal law (California Healthline, 5/29).
Investigators said the alleged "marketing practices" cost state and federal health programs $145 million. Medicare beneficiaries also paid more, since many were charged 20% of the "inflated bills" (USA Today, 10/4). However, TAP President Thomas Watkins "fundamentally disagreed" with most of the allegations but said the company decided to settle the case after the government "threatened" to stop all reimbursement for Lupron (Petersen, New York Times, 10/4). The settlement does not end the case against TAP, as indictments for doctors and former TAP employees "could follow" (Gellene, Los Angeles Times, 10/4). Also, a civil suit against TAP filed by Medicare beneficiaries seeking to recover the 20% copayments they made is pending in U.S. District Court in Boston (Dembner, Boston Globe, 10/4).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.