This landmark case was the largest False Claims Act recovery of 2018. AmerisourceBergen Corporation, one of the nation’s largest wholesale drug companies, paid $625 million to settle claims under the False Claims Act. In a related settlement, one of its subsidiaries paid a $260 million criminal fine. The settlements involved AmerisourceBergen’s illegal repackaging of injectable drugs into pre-filled syringes at an unlicensed facility to profit from the “overfill” contained in the vials.
The combined $885 million settlement is one of the largest pharmaceutical settlements in history. AmerisourceBergen also entered into a Corporate Integrity Agreement with HHS OIG. In addition, AmerisourceBergen shuttered the unlicensed facility in 2014 as a result of the investigation.
AmerisourceBergen’s scheme centered on drugs treating cancer or the side effects of cancer treatments. Federal law requires that injectable drug vials contain a small amount of extra drug product, called overfill, to ensure that patients receive a full dose.
AmerisourceBergen operated a subsidiary in Alabama that it falsely told the government was a pharmacy. The defendants used the facility to open sterile vials of cancer drugs, pool the contents, and repackage the drugs into pre-filled syringes. The facility ignored safety protocols, called “current good manufacturing practices” (or “cGMPs”), required by the FDA.
AmerisourceBergen’s overfill scheme essentially allowed it to sell more doses than it purchased. It then used the “free” doses to offer the syringes to physicians at a discount. Consequently, patients unwittingly obtained adulterated and contaminated cancer drugs. These drugs included Procrit®, Aloxi®, Kytril®, and its generic form granisetron, Anzemet® and Neupogen®.
Drug manufacturers and repackagers have a duty to ensure the safety and proper handling of the drugs they distribute. However, by bypassing the FDA’s requirements and falsely holding itself out as a “pharmacy,” the subsidiary shipped unapproved drug forms. This also compromised critical information for doctors and patients. The unlicensed facility is now closed.
The Alabama-based subsidiary, which prosecutors say AmerisourceBergen had falsely told physician clients was a pharmacy, produced thousands of syringes daily, and eventually more than one million a year. The syringes were sold throughout the U.S., prosecutors said.
The scheme enabled the company to bill multiple health-care providers for the same vial of drug, causing some of them to bill the federal government more than once for the same vial. It also enabled the company to increase its market share by offering various discounts.
Samuel Rubenfeld and Micah Maidenberg, Former AmerisourceBergen Exec Blew Whistle That Led to Settlement, Wall Street Journal (October 2, 2018)
Our client, Michael Mullen, was the first relator to file a qui tam suit against AmerisourceBergen under the federal False Claims Act and state false claims acts. Mr. Mullen was the former chief operating officer of a subsidiary of AmerisourceBergen. As a result, he learned that the company was operating an unlicensed facility that it called a “pharmacy” outside the regulatory oversight of the U.S. Food and Drug Administration (FDA).
He then alerted law enforcement of his concerns after vetting his claims with whistleblower lawyers.
The credentials and experience of this team are exceptional. It was obvious that they have extraordinary credibility with the both the government and other counsel. What sets them apart is that they also are thoughtful, decent, friendly, smart people who welcomed and engaged me as a valued member of the team. They prefer to collaborate and play well with others but are equally effective when a tougher approach or litigation is called for. This is a fine, trustworthy group of attorneys who are committed to doing the right thing.
– Mike Mullen
Mr. Mullen’s inside knowledge played an instrumental role in the $625 million civil False Claims Act settlement. This resolved issues that the overfill scheme caused false and fraudulent claims to government health care programs. The claims were false and fraudulent because they included unapproved and adulterated cancer drugs, double-billing from exploiting overfill, and kickbacks to physicians. As a result, AmerisourceBergen was liable under the False Claims Act for causing physicians to submit the false and fraudulent claims.
Mr. Mullen’s whistleblowing was also critical in the federal government’s criminal investigation of the company. The investigation led to AmerisourceBergen Specialty Group, a wholly-owned subsidiary of AmerisourceBergen, pleading guilty to illegally distributing misbranded drugs. The subsidiary also paid $260 million to resolve criminal liability for distributing these drugs from a facility not registered with the FDA. Mr. Mullen provided the government with the first-hand, operational knowledge necessary to detect violations of federal and state laws and force the closure of the unlicensed facility.
Mr. Mullen could have remained silent and continued to accept the lavish compensation packages and perks of corporate life. However, he instead chose to do the right thing. He spoke up to his superiors about the problems he saw. His employer abruptly terminated Mr. Mullen shortly after he blew the whistle. In recognition of the critical role Mr. Mullen’s information and cooperation provided, as well as two later to file relators, federal and state governments awarded a relator’s share of close to $100 million, one of the largest relator share awards under the FCA.
If you know of fraud involving any health care item or service, we urge you to speak with a whistleblower lawyer to weigh your options. We invite you to contact us for a free, confidential, consultation.
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