Aventis Settles FCA Suit for $95.5 Million

Yesterday the American Lawyer picked up the private label settlement and printed an on-line article that incorrectly included the comment that the Company admitted to misreporting prices. We contacted the author to point out the error and asked that they correct the article. They have reissued the corrected story included below.

Aventis Settles FCA Suit for $95.5 Million
By Ben Hallman 
May 29, 2009

Note: An earlier version of this article incorrectly reported that Aventis admitted to misreporting best prices for three nasal sprays. In fact, Aventis made no such admission as part of the settlement. We regret the error.

For those of you keeping score at home, the Department of Justice has announced yet another multimillion-dollar False Claims Act settlement with a pharmaceutical company. This time, the defendant–Aventis Pharmaceutical Inc., a subsidiary of Sanofi-Aventis U.S.–agreed to pay $95.5 million to settle allegations that it misreported drug prices to skirt its Medicaid rebate obligations. This was Aventis’s second FCA settlement in the last two years; it paid $190 million in 2007 to resolve allegations of fraudulent pricing of an antinausea drug. The company was represented by Michael Koon and Robert McCully of Shook, Hardy & Bacon and Richard Gargiulo of Boston’s Gargiulo Rudnick.

The settlement continues the unprecedented wave of FCA deals we’ve seen over the last six months. And it comes close on the heels of the Justice Department’s announcement that it would intervene in two whistle-blower lawsuits against the pharmaceutical giant Wyeth, alleging that the company overcharged state Medicaid programs hundreds of millions of dollars through special pricing arrangements with thousands of hospitals nationwide.

Aventis, which did not admit to wrongdoing in the settlement, allegedly misreporting best prices for the anti-inflammatory nasal sprays Azmacort, Nasacort, and Nasacort AQ between 1995 and 2000. Aventis was accused of entering into “private label” agreements with the HMO Kaiser Permanente, which repackaged Aventis’s drugs under a new label, thus allegedly allowing Aventis to underpay drug rebates to the Medicaid program and to overcharge certain public health service entities. (Here’s a story about the case from The National Law Journal and here’s the NLJ’s take on newly enacted changes in the false claims statute.

The Aventis settlement is unusual in that the case did not begin as a qui tam suit, so there’s no payout to a whistle-blower. Under the deal, the federal government will recover about $49 million; Aventis will also pay more than $40 million to the Medicaid-participating states, and more than $6 million to the public health services entities that paid inflated prices.

For the government, the case was handled by the Justice Department’s civil division, the Massachusetts U.S. attorney’s office, the Department of Health and Human Services’s Office of Inspector General and Office of Counsel to the Inspector General, and the National Association of Medicaid Fraud Control Units.