3 drug firms to settle inflated-price claims

By Alicia A. Caldwell
Wednesday, December 8, 2010

Three pharmaceutical manufacturers have agreed to pay more than $421 million to settle allegations that the companies reported inflated prices for numerous products, the Justice Department announced Tuesday.

Abbott Laboratories agreed to pay $126.5 million; B. Braun Medical will pay just over $14.7 million and Roxane Laboratories agreed to pay $280 million.

The government said the companies knew that federal health-care programs relied on the inflated prices to set payment rates.

The Justice Department has recovered more than $1.8 billion from pharmaceutical companies arising from similar unlawful drug-pricing schemes, Assistant Attorney General Tony West told a news conference.

West said the three companies inflated the "average wholesale price" for dozens of their products, including powerful antibiotics, used by Medicare and Medicaid patients.

They reported these inflated prices to published national pricing lists used by the government to determine what it will pay doctors and druggists who provided those drugs to their Medicare and Medicaid patients, he said.

By leading the government to believe that the drugs sold at higher prices, West added, pharmaceutical companies gained market share by offering substantial profits to pharmacists and doctors who dispensed their drugs.

All three companies denied wrongdoing and said they settled to end what each described as costly litigation with the federal government.

- Associated Press

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