Opinion
MDL No. 1456, Master File No. 01-12257-PBS, (Original Southern District of Florida No. 95-1354-CIV-GOLD).
May 8, 2007
Jeffrey B. Aaronson, Bell, Boyd Lloyd 3, Chicago, IL, representing Baxter International, Inc. Defendant.
Marc E. Ackerman, Harris Beach LLP, New York, NY, representing Sandoz, Inc. Consolidated Defendant.
Joseph G. Adams, Snell Wilmer LLP, Phoenix, AZ, representing Pharmacia Upjohn, Inc. Consolidated Defendant.
Pamela Zorn Adams, Sherin and Lodgen LLP, Boston, MA, representing Pharmacia Corporation Consolidated Defendant, Gensia Sicor Pharmaceuticals, Inc. Defendant.
Kenneth W. Africano, Harter, Secrest Law firm, Buffalo, NY, representing Sicor, Inc. Defendant, Ivax Corp. Defendant, Teva Pharmaceuticals USA, Inc. Defendant, Ivax Corp. Defendant, Teva Pharmaceuticals USA, Inc. Defendant, Allergan Inc. Consolidated Defendant.
Kevin N. Ainsworth, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., New York, NY, representing Bayer Corporation Consolidated Defendant, Novo Nordisk Pharmaceuticals, Inc. Consolidated Defendant, Eli Lilly and Company Consolidated Defendant.
Neil Alden Bowman and Brooke LLP, Phoenix, AZ, representing Baxter Healthcare Corp. Consolidated Defendant.
C. Jarrett Anderson, Anderson LLC, Austin, TX, representing Baxter International, Inc. Defendant, Ven-A-Care of the Florida Keys Inc. Consolidated Plaintiff.
Anthony J., Anscombe Sedgwick, Detert Moran Arnold, Chicago, IL, representing Ven-A-Care of the Florida Keys, Inc. Consolidated Plaintiff, Ven-A-Care of the Florida Keys, Inc. Plaintiff, Bristol-Myers Squibb Company Consolidated Defendant.
Justin S. Antonipillai, Arnold Porter, Washington, DC, representing Ethex Corporation Defendant.
Melissa Aoyagi, Davis Polk Wardwell, New York, NY, representing Ethex Corporation Defendant, Astrazeneca Pharmaceuticals LP Defendant.
Martin A. Aronson, Morrill Aronson, Phoenix, AZ, representing Fujisawa Healthcare, Inc. Consolidated Defendant.
Daniel F. Attridge, Kirkland Ellis, Washington, DC, representing Fujisawa USA, Inc. Consolidated Defendant, B. Braun Medical Inc. Defendant.
Megan M., Auchincloss Morrison Foerster LLP, Denver, CO, representing B.Braun of America Defendant, Purdue Pharma L.P. Defendant.
Pamela J. Auerbach, Kirkland Ellis LLP, Washington, DC, representing Barr Laboratories, Inc. Consolidated Defendant.
Jennifer Aurora, Sedgwick, Detert, Moran Arnold LLP, New York, NY, representing Organon Pharmaceuticals USA, Inc. Defendant.
Gary L. Azorsky, Berger Montague, PC, Philadelphia, PA, representing Ven-A-Care of the Florida Keys, Inc. Plaintiff.
Violeta I Balan, Mayer, Brown, Rowe Maw LLP, Chicago, IL, representing Ven-A-Care of the Florida Keys Inc. Consolidated Plaintiff, Ven-A-Care of the Florida Keys, Inc. Consolidated Plaintiff, Johnson Johnson Consolidated Defendant.
Mitchell J. Banas, Jr., Jaeckle Fleischmann Mugel LLP, Buffalo, NY, representing Biogen Idec, Inc. Consolidated Defendant.
Susan Hughes, Banning Hemenway Barnes, Boston, MA, representing Neighborhood Health Plan, Inc. Movant.
Anita Bapooji Ryan, Goodwin Procter LLP, Boston, MA, representing TAP Pharmaceutical Products, Inc. Defendant.
Jason E. Baranski, Morgan Lewis Bockius, LLP, Philadelphia, PA, representing Pharmacia Upjohn, Inc. Defendant.
Scott A. Barbour, McName, Lochner, Titus Williams, Albany, NY, representing Pharmacia Corp. TERMINATED: 10/26/2004 Defendant, Ivax Corp. Consolidated Defendant.
Steven F. Barley, Hogan Hartson, LLP, Baltimore, MD, representing Teva Pharmaceutical USA Consolidated Defendant, Amgen Inc. Defendant.
Jessica Vincent, Barnett Foley Hoag LLP, Boston, MA, representing Astrazeneca Pharmaceuticals LP Defendant.
Charles Barnhill, Miner, Barnhill Galland, Madison, WI, representing Commonwealth of Kentucky Consolidated Plaintiff.
Christopher K. Barry-Smith Office of the Attorney General, Boston, MA, representing State of Illinois Consolidated Defendant, State of Massachusetts Consolidated Defendant.
S. Paul Battaglia, Bond, Schoeneck King PLLC, Syracuse, NY, representing Par Pharmaceutical, Inc. Consolidated Defendant.
Jon Steven, Baughman Ropes Gray LLP, Washington, DC, representing Schering-Plough Corporation Consolidated Defendant.
Edwin Baum Proskauer, Rose Law Firm, New York, NY, representing Warrick Pharmaceuticals Corporation Consolidated Defendant, Biovail Pharmaceuticals, Inc. 700 Route 202/206 North Bridgewater, NJ 08807 Consolidated Defendant.
P. Ryan Beckett, Butler, Snow, O'Mara, Stevens Cannada, Jackson, MS, representing Eli Lilly and Company Consolidated Defendant.
Rebecca Bedwell-Coll Mascone, Emblidge Quadra, Francisco, CA, representing Constance Thompson Plaintiff.
Stacy D. Belf Ropes Gray LLP, Washington, DC, representing John B. Rice Plaintiff, Schering-Plough Corporation Consolidated Defendant.
Terrianne Benedetto, Kline Specter, Philadelphia, PA, representing International Union of Operating Engineers, Local No. 68 Welfare Fund Consolidated Plaintiff.
Curtis Bergen, Bowman and Brooke LLP, Phoenix, AZ, representing Susan Aaronson Kline Specter, P.C. 1525 Locust Street Philadelphia, PA 19102 US 215-772-1000 215-735-0957 (fax) terri.benedetto@klinespecter.com Plaintiff, Baxter Healthcare Corp. Consolidated Defendant.
Elizabeth M Bergen, Gibson, McAskill Law Firm, Buffalo, NY, representing Baxter International, Inc. Defendant, Abbott Laboratories, Inc. Consolidated Defendant.
Lawrence D. Berger, Ballard, Spahr, Andrews Ingersoll, LLP, Philadelphia, PA, representing TAP Pharmaceutical Products, Inc. Consolidated Defendant, Immunex Corporation TERMINATED: 01/25/2007 Consolidated Defendant.
Mark A. Berman, HARTMANN DOHERTY ROSA BERMAN, LLC, Hackensack, NJ, representing Berlax Laboratories, Inc. Defendant.
Steve W. Berman, Hagens Berman Sobol Shapiro LLP, Seattle, WA, representing Reliant Pharmaceauticals, LLC Defendant, Shirley Geller Consolidated Plaintiff.
David J. Bershad, Milberg Weiss Bershad Hynes Lerach LLP, New York, NY, representing State of Nevada Plaintiff, State of Montana Plaintiff, All Plaintiffs Plaintiff, Government Employees Hospital Association Consolidated Plaintiff, Pipefitters Local
537 Trust Funds Plaintiff, Harold Bean Plaintiff, Arizona, State of Consolidated Plaintiff, State of Arizona Consolidated Plaintiff, State of Nevada Consolidated Plaintiff, Citizens for Consumer Justice Plaintiff.
Adelina O. Berumen, California Department of Justice Bureau of Medi-Cal Fraud, Diego, CA, representing Colorado Progressive Coalition Plaintiff, Congress of California Seniors Plaintiff, Florida Alliance for Retired Americans Plaintiff, Health Care For All Plaintiff, Massachusetts Senior Action Council Plaintiff, Masspirg Plaintiff, Minnesota Senior Federation Plaintiff, New Jersey Citizen Action Plaintiff, New York State Wide Senior Action Council Plaintiff, Pennsylvania Alliance For Retired Americans Plaintiff, Vermont Public Interest Research Group Plaintiff, West Virginia Citizen Action Plaintiff, Wisconsin Citizen Action Plaintiff, Citizen Action of New York Plaintiff, Connecticut Citizen Action Group Plaintiff, Gray Panthers of Sacramento Plaintiff, Health Action of New Mexico Plaintiff, Maine Consumers for Affordable Health Care Plaintiff, North Carolina Fair Share Plaintiff, Oregon Health Action Campaign Plaintiff, Oregon State Public Interest Research Group Plaintiff, United Senior Action of Indiana, Inc. Plaintiff, Betty Sicher Plaintiff, Jack Douglas Plaintiff, Joan S. Lee Plaintiff, John Bennett Plaintiff, Pearl Munic Plaintiff, Sue Miles Plaintiff, State of California Plaintiff.
Aimee E. Bierman, Kirkpatrick Lockhart Preston Gates Ellis LLP, Boston, MA, representing Aventis Behring LLC Consolidated Defendant.
Brandon L. Bigelow, Bingham McCutchen LLP, Boston, MA, representing Hoechst Marion Roussel, Inc. Consolidated Defendant, Aventis Pharma TERMINATED: 10/26/2004 Consolidated Defendant, Aventis Pharmaceuticals Inc. Defendant, Hoescht Marion Roussel, Inc. Defendant, Sanofi-Synthelabo, Inc. TERMINATED: 10/26/2004 Defendant, Takeda Pharmaceuticals North America, Inc. Defendant.
Scott A. Birnbaum, Birnbaum Godkin, LLP, Boston, MA, representing Takeda Pharmaceutical Company, Limited Consolidated Defendant, Ethex Corporation Defendant.
Sheila L. Birnbaum, Skadden, Arps, Slate, Meagher Flom, New York, NY, representing Ethex Corporation Defendant, Schering-Plough, Corp Defendant.
Donald Wayne, Bivens Meyer Hendricks Bivens PA, Phoenix, AZ, representing Warrick Pharmaceuticals Corporation Consolidated Defendant, Dey, Inc. Consolidated Defendant.
Steven E. Bizar, Buchanan Ingersoll, P.C., Philadephia, PA, representing AmerisourceBergen Corporation Unknown.
Sam B. Blair, Jr., Baker, Donelson, Bearman, Caldwell, Berkowitz, P.C., Memphis, TN, representing Monarch Pharmaceuticals, Inc. Defendant.
Lynn M. Blake, Freidman, Hirschen Law Firm, Albany, NY, representing King Pharmaceuticals, Inc. Defendant, King Pharmaceuticals, Inc. Consolidated Defendant, Monarch Pharmaceuticals, Inc. Consolidated Defendant, Eisai, Inc. Consolidated Defendant.
Lynn M. Blake, Freidman, Hirschen Law Firm, Albany, NY, representing Schering-Plough Corporation Corporation Defendant, Warrick Pharmaceuticals Corporation Consolidated Defendant, Genzyme Corporation Consolidated Defendant.
Robert P. Blood, Goodwin Procter LLP, Boston, MA, representing TAP Pharmaceutical Products, Inc. Consolidated Defendant.
Elise M. Bloom, Proskauer, Rose Law Firm, New York, NY, representing TAP Pharmaceutical Products, Inc. Defendant, Biovail Pharmaceuticals, Inc. 700 Route 202/206 North Bridgewater, NJ 08807 Consolidated Defendant.
Jack B. Blumenfeld, Morris, Nichols, Arsht, Tunnell, Wilmington, DE, representing Astrazeneca PLC Consolidated Defendant.
Thomas L. Boeder, Perkins Coie, Seattle, WA, representing Immunex Corp. TERMINATED: 01/25/2007 Defendant.
Anthony Bolognese, Bolognese Associates, Philadelphia, PA, representing United Food Commercial Workers Unions and Employers Midest Health Benefits Fund Consolidated Plaintiff.
Nancy M Bonnell, Phoenix, AZ, representing Abbott Laboratories Consolidated Plaintiff.
Neville H. Boschert, Watkins, Ludlam, Winter Stennis, P.A., Jackson, MS, representing Action Alliance of Senior Citizens of Greater Philadelphia Consolidated Plaintiff, All Plaintiffs Plaintiff, Arizona, State of Consolidated Plaintiff, Carpenters Millwrights of Houston and Vicinity Welfare Trust Fund, Board of Trustees, Individually and on behalf of all others similarly situated Consolidated Plaintiff, Citizens for Consumer Justice Plaintiff, Colorado Progressive Coalition Plaintiff, Commonwealth of Kentucky Consolidated Plaintiff, Commonwealth of Pennsylvania Consolidated Plaintiff, Congress of California Seniors Plaintiff, Connecticut Citizen Action Group Plaintiff, County of Chautauqua Plaintiff, County of Chenango Consolidated Plaintiff, County of Cortland Consolidated Plaintiff, County of Dutchess Consolidated Plaintiff, County of Lewis Consolidated Plaintiff, County of Nassau Consolidated Plaintiff, County of Onondaga Consolidated Plaintiff, County of Ontario Consolidated Plaintiff, County of Orleans Consolidated Plaintiff, County of Oswego Consolidated Plaintiff, County of Rockland Consolidated Plaintiff, County of Schenectady Consolidated Plaintiff, County of Schuyler Consolidated Plaintiff, County of Seneca Consolidated Plaintiff, County of Westchester Consolidated Plaintiff, County of Wyoming Consolidated Plaintiff, Essex County Consolidated Plaintiff, Florida Alliance for Retired Americans Plaintiff, Government Employees Hospital Association Consolidated Plaintiff, Gray Panthers of Sacramento Plaintiff, Health Action of New Mexico Plaintiff, Health Care For All Plaintiff, International Union of Operating Engineers, Local No. 68 Welfare Fund Consolidated Plaintiff, Maine Consumers for Affordable Health Care Plaintiff, Massachusetts Senior Action Council Plaintiff, Masspirg Plaintiff, Minnesota Senior Federation Plaintiff, National Automatic Sprinkler Industry Welfare Fund Intervenor Plaintiff, New Jersey Citizen Action Plaintiff, New York State Wide Senior Action Council Plaintiff, North Carolina Fair Share Plaintiff, Oregon Health Action Campaign Plaintiff, Oregon State Public Interest Research Group Plaintiff, Pennsylvania Alliance For Retired Americans Plaintiff, Pipefitters Local 537 Trust Funds Plaintiff, Rice Thompson Plaintiff, State of Arizona Consolidated Plaintiff, State of California Plaintiff, State of Connecticut Plaintiff, State of Florida Consolidated Plaintiff, State of Florida Plaintiff, State of Mississippi Consolidated Plaintiff, State of Montana Plaintiff, State of Nevada Consolidated Plaintiff, State of Nevada Plaintiff, State of Nevada/State of Montana Plaintiff, State of New York Plaintiff, State of Ohio Consolidated Plaintiff, State of South Carolina Consolidated Plaintiff, Suffolk County NY Plaintiff, The City of New York Consolidated Plaintiff, The City of New York and Captioned New York Counties Plaintiff, The County of Columbia Consolidated Plaintiff, The County of Erie Consolidated Plaintiff, The County of Ulster Consolidated Plaintiff, The People of the State of Illinois Plaintiff, Twin Cities Baker Workers Health Welfare Fund Consolidated Plaintiff, United Food Commercial Workers Unions and Employers Midest Health Benefits Fund Consolidated Plaintiff, United Senior Action of Indiana, Inc. Plaintiff, United States, ex rel. Consolidated Plaintiff, Ven-A-Care of the Florida Keys Inc. Consolidated Plaintiff, Ven-A-Care of the Florida Keys, Inc. Consolidated Plaintiff, Ven-A-Care of the Florida Keys, Inc. Plaintiff, Vermont Public Interest Research Group Plaintiff, West Virginia Citizen Action Plaintiff, Wisconsin Citizen Action Plaintiff, Betty Sicher Plaintiff, Constance Thompson Plaintiff, Edward West Consolidated Plaintiff, Harold Bean Plaintiff, Henry D. McMaster Consolidated Plaintiff, Jack Douglas Plaintiff, Joan S. Lee Plaintiff, John Bennett Plaintiff, John V. Digel Consolidated Plaintiff, John B. Rice Plaintiff, Kimberly K. Hoover Intervenor Plaintiff, Leroy Townsend Consolidated Plaintiff, Pearl Munic Plaintiff, Robert J. Swanston Plaintiff, Roberta S. Starks Intervenor Plaintiff, Ronald E. Turner Consolidated Plaintiff, Shirley Geller Consolidated Plaintiff, Sue Miles Plaintiff, T. Mark Jones Consolidated Plaintiff, T. Mark Jones Plaintiff, Zachary T. Bentley Consolidated Plaintiff, The City of New York 100 Church Street Room 3-162 New York, NY 10007 212-788-1007 Plaintiff, Susan Aaronson Kline Specter, P.C. 1525 Locust Street Philadelphia, PA 19102 US 215-772-1000 215-735-0957 (fax) terri.benedetto@klinespecter.com Plaintiff, Kline Specter, P.C. Kline Specter, P.C. 1525 Locust Street 19th Floor Philadelphia, PA 19102 US 215-772-1000 215-735-0957 (fax) shanin.specter@klinespecter.com All Plaintiffs, Esquire Donald E. Haviland, Jr. The Haviland Law Firm, LLC, 740 S. Third Street Third Floor Philadelphia, PA 19147 US 215-609-4661 215-392-4400 (fax) haviland@havilandlaw.com Plaintiff, Ivax Pharmaceuticals, Inc. Consolidated Defendant.
Michael P Boudett, Foley Hoag LLP, Boston, MA, representing Sicor Inc. Consolidated Defendant, Teva Pharmaceuticals USA, Inc. Defendant, Astrazeneca Pharmaceuticals LP Defendant.
Ali Bovingdon, Helena, MT, representing State of Montana Plaintiff.
Felix Lee Bowie, III, Davidson, Bowie Sims, PLLC, Jackson, MS, representing Wyeth Consolidated Defendant.
George Ian Brandon, Sr. Squire Sanders Dempsey, LLP, Phoenix, AR, representing Apothecon, Inc. Consolidated Defendant.
Jeniphr Breckenridge, Hagens Berman Sobol Shapiro, LLP, Seattle, WA, representing Bristol-Myers Squibb Co. Consolidated Defendant, Oncology Therapeutics Network Corp. Consolidated Defendant, All Plaintiffs Plaintiff.
James J. Breen The Breen Law Firm, P.A., Alpharetta, GA, representing State of Nevada Consolidated Plaintiff, State of Nevada/State of Montana Plaintiff, Ven-A-Care of the Florida Keys, Inc. Plaintiff.
Thomas W., Breidenstein Barrett Weber, Cincinnati, OH, representing State of California Plaintiff, Ven-A-Care of the Florida Keys, Inc. Consolidated Plaintiff, State of Ohio Consolidated Plaintiff.
Julie B. Brennan, Manchel Brennan, P.C., Newton, MA, representing UnitedHealthcare, Inc. United HealthCare Insurance Company, 9900 Bren Road East Minnetonka, MN 55343 US Unknown.
Charlie Bridgmon, McCutchen, Balnton, Rhodes Johnson, Columbia, SC, representing Oxford Health Plans, LLC Unknown, State of South Carolina Consolidated Plaintiff.
Douglas S. Brooks, Kelly, Libby Hoopes, PC, Boston, MA, representing Henry D. McMaster Consolidated Plaintiff, State of South Carolina Consolidated Plaintiff, Amgen Inc. Defendant.
Melanie Matison, Brown Sedgwick Detert Moran Arnold, Chicago, IL, representing Bristol-Myers Squibb Co. Consolidated Defendant.
Raymond L. Brown, Brown, Buchanan Sessoms, PA, Pascagoula, MS, representing Astrazenca LP Consolidated Defendant.
John Anthony, Bruegger Simmons Cooper, Alton, IL, representing Edward West Consolidated Plaintiff.
Nicole Y. Brumsted, Lieff Cabraser Heimann Bernstein, LLP, Boston, MA, representing Citizens for Consumer Justice Plaintiff.
Jason Bruno, Dickstein Shapiro Morin Oshinsky LLP, Washington, DC, representing Colorado Progressive Coalition Plaintiff, Congress of California Seniors Plaintiff, Florida Alliance for Retired Americans Plaintiff, Health Care For All Plaintiff, Massachusetts Senior Action Council Plaintiff, Masspirg Plaintiff, Minnesota Senior Federation Plaintiff, New Jersey Citizen Action Plaintiff, New York State Wide Senior Action Council Plaintiff, Pennsylvania Alliance For Retired Americans Plaintiff, Vermont Public Interest Research Group Plaintiff, West Virginia Citizen Action Plaintiff, Wisconsin Citizen Action Plaintiff, Baxter Healthcare Corp. Consolidated Defendant.
Patrick M. Bryan, Kirkland Ellis LLP, Washington, DC, representing Baxter International, Inc. Defendant, Ivax Corp. Defendant.
Bill L Bryant, Jr., Akerman Senterfitt-Tallahassee FL., Tallahassee, FL, representing Teva Pharmaceutical USA Consolidated Defendant, Boehringer Ingelheim International GMBH Consolidated Defendant.
Michael M. Buchman, Milbert, Weiss, Bershad, Hynes Lerach, LLP, New York, NY, representing Boehringer Ingelheim Pharmaceuticals, Inc. Consolidated Defendant, Boehringer Ingelheim Roxane, Inc Consolidated Defendant, C H Boehringer Sohn Consolidated Defendant, Pharma-Investment Limited Consolidated Defendant, Roxane Inc Consolidated Defendant, Roxane laboratories, Inc. Defendant, Colorado Progressive Coalition Plaintiff.
Daniel Jerome, Buckley Vorys Sater Seymour Pease Atrium Two, Cincinnati, OH, representing Congress of California Seniors Plaintiff, Florida Alliance for Retired Americans Plaintiff, Health Care For All Plaintiff, Massachusetts Senior Action Council Plaintiff, Masspirg Plaintiff, Minnesota Senior Federation Plaintiff, New Jersey Citizen Action Plaintiff, New York State Wide Senior Action Council Plaintiff, Pennsylvania Alliance For Retired Americans Plaintiff, Vermont Public Interest Research Group Plaintiff, West Virginia Citizen Action Plaintiff, Wisconsin Citizen Action Plaintiff, Citizens for Consumer Justice Plaintiff, Citizen Action of New York Plaintiff, Connecticut Citizen Action Group Plaintiff, Gray Panthers of Sacramento Plaintiff, Health Action of New Mexico Plaintiff, Maine Consumers for Affordable Health Care Plaintiff, North Carolina Fair Share Plaintiff, Oregon Health Action Campaign Plaintiff, Oregon State Public Interest Research Group Plaintiff, United Senior Action of Indiana, Inc. Plaintiff, Betty Sicher Plaintiff, Jack Douglas Plaintiff, Joan S. Lee Plaintiff, John Bennett Plaintiff, Pearl Munic Plaintiff, Sue Miles Plaintiff, County of Nassau Consolidated Plaintiff, Boehringer Ingelheim Roxane, Inc Consolidated Defendant.
Brett R. Budzinski, Wilmer Cutler Pickering Hale and Dorr LLP, Boston, MA, representing Novartis Pharmaceuticals Corporation Defendant.
JonMarc P. Buffa, Sonnenschein Nath Rosenthal LLP, Washington, DC, representing Ivax Corp. Defendant.
James Eugene Burke, keating Muething Klekamp, Cincinnati, OH, representing Sicor, Inc. Defendant, Teva Pharmaceuticals USA, Inc. Defendant, DEY, L.P. Intervenor Defendant.
James C. Burling, Wilmer Cutler Pickering Hale and Dorr LLP, Boston, MA, representing American Home Products Corp. TERMINATED: 03/04/2004 Defendant.
Biogen, Inc. Defendant, Biogen IDEC U.S. Consolidated Defendant, Biogen Idec, Inc. Consolidated Defendant.
MEMORANDUM AND ORDER
I. INTRODUCTION
In this qui tam action, the United States seeks to recover losses to the Medicare and Medicaid programs caused by allegedly fraudulent average wholesale prices reported by defendant Abbott Laboratories, Inc., a drug manufacturer, with respect to four of its multi-source generic drugs. The crux of the government's complaint is that Abbott fraudulently inflated the "average wholesale price" ("AWP") that it reported to drug pricing compendia used by the government to set reimbursement rates for pharmaceuticals, and that as a result of the publication of these inflated prices, the government over-paid medical providers for Abbott's drugs. The government alleges that Abbott violated the False Claims Act ("FCA"), 31 U.S.C. § 3729(a)(1) (2), and common law by fraudulently inflating the AWP of its drugs. The defendant has moved to dismiss. After oral argument, the Court DENIES Abbott's motion to dismiss.
The complaint was initially brought by Ven-A-Care of the Florida Keys, Inc. on behalf of the United States. The United States ultimately intervened in the case against Abbott. On May 15, 2006, the United States District Court for the Southern District of Florida unsealed the portion of the government's complaint relating to Abbott, and the case was transferred to this Court handling the multi-district litigation.
II. FACTUAL BACKGROUND
This memorandum assumes familiarity with the basic concepts underlying AWP and other drug pricing methodologies. For a detailed discussion of these methods of pricing and an overview of the structure of the pharmaceutical industry, see In re Pharm. Indus. Average Wholesale Price Litig., 263 F. Supp. 2d 172 (D. Mass. 2003). See also In re Pharm. Indus. Average Wholesale Price Litig., 307 F. Supp. 2d 196 (D. Mass. 2004); In re Pharm. Indus. Average Wholesale Price Litig., 460 F. Supp. 2d 277 (D. Mass. 2006) (defining AWP under federal statute).
The government's complaint against Abbott alleges that the defendant engaged in a fraudulent scheme that caused the Medicare and Medicaid programs to pay excessive reimbursement to Abbott's customers, who are medical providers such as pharmacies, physicians, hospitals, and clinics. In order to perpetrate this scheme of fraud, the complaint alleges that Abbott reported false or misleading pricing information — generally in the form of AWPs — about its products to several price reporting services that the Medicare and Medicaid programs relied upon to set reimbursement rates for Abbott's customers. The government, in turn, utilizes these reporting publications to determine its reimbursement prices. In order to compile their pricing compendia, publishers receive drug pricing information from the manufacturers of the various drugs, such as Abbott, and then base their published pricing data on this information. Thus, the complaint alleges that the drug manufacturers control the prices that are reported by the compendia. As a result, drug makers can effectively fix the AWP of their own drugs.
In general, this pricing scheme allows drug manufacturers to set reimbursement prices to levels well above the providers' acquisition costs. The difference between the reported AWP of a prescription drug and the drug's actual acquisition cost is referred to as the drug's "spread." By inflating the prices provided to the compendia, and thus pumping up the AWP of the drug, pharmaceutical manufacturers increase a drug's spread. Plaintiff alleges that this increase in spread consequently magnifies a drug's profitability to the financial benefit of the providers, like pharmacies. The complaint alleges that Abbott marketed these inflated spreads to its customers.
The effect that increasing a drug's reported AWP has on the price paid by the federal government depends on whether the drug is a single-source drug or a multi-source drug. For single-source drugs, the government's reimbursement rates for Medicare were set by statute at 95% of AWP from 1998 until 2003; before 1998, rates were set at 100% of AWP or estimated acquisition cost. 42 U.S.C. § 1395u(o) (West 1998). For multi-source drugs, like the ones at issue here, the government set its reimbursement figures from 1998 to 2003 at 95% of the lesser of the median of all generic AWPs or the lowest branded AWP for a given drug; before 1998, multi-source drugs were reimbursed at 100% of the median generic AWP. Id.; 42 C.F.R. § 405.517 (2003); see also In re Pharm. Indus. Average Wholesale Price Litig., 230 F.R.D. 61, 70 (D. Mass. 2005).
For instance, the complaint alleges that in 2001, Abbott sold several drugs with grossly inflated AWPs: Vancomycin, an antibiotic (NDC: 00074653501), a 5% Dextrose Solution (NDC: 00074792336), and a 0.9% Sodium Chloride Solution (NDC: 00074798436). For Vancomycin, the AWP reported by Abbott was $274.91. However, the actual acquisition cost of this drug was $67.95. Therefore, the "spread" was 304.57%. The Dextrose Solution and the Sodium Chloride Solution both had similarly inflated spreads; the Dextrose Solution was marked up by 917.22%, whereas the Sodium Chloride Solution had a profit margin spread of 1046.92%. The complaint alleges that Abbott reported these false inflated prices to the compendia, knowing that the government would use this information to set its reimbursement rates. As a result, the government charges that it overpaid for Abbott's drugs.
III. DISCUSSION
The complaint states four causes of action against Abbott. Count 1 alleges that Abbott violated the FCA, 31 U.S.C. § 3729(a)(1), by presenting or causing to be presented a false claim to the federal government. In addition, Count 1 asserts that Abbott contravened the FCA by violating the Anti-Kickback Statute. Count 2 alleges that Abbott violated 31 U.S.C. § 3729(a)(2) by making or using false records and statements to cause claims to be paid. Count 3 states a cause of action for unjust enrichment. Count 4 states a claim for common law fraud.
A. The False Claims Act
The defendant first argues that it is not liable under the FCA because there are no allegations that it presented any false claims to the federal government. Rather, as Abbott points out, medical providers submit the claims for reimbursement to the government. The government argues that though Abbott did not itself submit false claims, it violated the FCA because it caused false claims to be presented.
The FCA establishes liability for any person or organization that:
(1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval31 U.S.C. § 3729(a)(1) (emphasis added). To state a claim under this section, plaintiff must allege that the drug manufacturer caused "to be presented" a false or fraudulent claim for payment. The FCA reaches "any person who knowingly assisted in causing the government to pay claims which were grounded in fraud, without regard to whether that person had direct contractual relations with the government." United States ex rel. Marcus v. Hess, 317 U.S. at 544-45 (1943). Under a broad interpretation of the FCA, "a defendant may be liable if it operates under a policy that causes others to present false claims to the government." United States v. President Fellows of Harvard Coll., 323 F. Supp. 2d 151, 186-87 (D. Mass. 2004). As most courts agree, the FCA covers indirect bilking of the federal government. Id.
The complaint alleges that Abbott knew that the government calculated its payments based upon prices reported to the pricing compendia, and marketed the spread between the reimbursement rate and the acquisition cost of the provider. (See, e.g., Compl. ¶ 3 ("Abbott then sold the drugs for far lower prices, and marketed to existing and potential Customers the government-funded `spread' between the inflated reimbursement amounts and the actual acquisition costs of the drugs"); Compl. ¶ 37 ("documents also show that the company actively marketed the government-funded profits or `spreads' on its drugs created by its false [AWP] price representations."); Compl ¶ 74 ("Abbott actively knew about and marketed the large spreads on several of its drugs.")) Thus, as alleged, the submission by doctors and pharmacists of false pharmaceutical claims to Medicare and Medicaid was not only a foreseeable and substantial factor in the government's loss, but also it was "an intended consequence of the alleged scheme of fraud." California ex rel. Ven-A-Care of the Florida Keys, Inc. v. Abbott Labs., Inc., No 01-cv-12257, slip op. at 8-11 (D. Mass. March 22, 2007) (quoting United States ex rel. Franklin v. Parke-Davis, 147 F. Supp. 2d 39, 53 (D. Mass. 2001)).
B. Anti-Kickback Violations
The government contends that Abbott violated the federal Anti-Kickback Statute when it fraudulently published a false AWP and then marketed the "spread" between the reimbursement rate and the provider's acquisition cost. The federal Medicare/Medicaid Anti-Kickback Statute provides that:
(2) whoever knowingly and willfully offers or pays any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person —
(A) to refer an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or
(B) to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program,
shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both.42 U.S.C. § 1320a-7b(b)(2) (emphasis added).
The government argues that Abbott's violations of this statute triggers civil liability under the FCA. The seminal case on point is United States ex rel. McNutt v. Haleyville Medical Supplies, Inc., 423 F.3d 1256, 1259-60 (11th Cir. 2005) where the Eleventh Circuit held that a defendant who made a false certification of compliance with the Anti-Kickback Statute when submitting claims for Medicare reimbursement and can be held liable under the FCA. It explained, "When a violator of government regulations is ineligible to participate in a government program and that violator persists in presenting claims for payment that the violator knows the government does not owe, that violator is liable, under the [False Claims] Act, for its submission of those false claims." Id. at 1259.
Many courts have recognized that a false certificate of compliance with federal health care law, such as the Anti-Kickback Statute, creates FCA liability. See United States ex rel. Schmidt v. Zimmer, Inc., 386 F.3d 235, 345 (3d Cir. 2004) ("A certificate of compliance with federal health care law is a prerequisite to eligibility under the Medicare program."); see also United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 902 (5th Cir. 1997) ("Thus, where the government has conditioned payment of a claim upon a claimant's certification of compliance with, for example, a statute or regulation, a claimant submits a false or fraudulent claim when he or she falsely certifies compliance with that statute or regulation."). While the First Circuit has not directly addressed the issue, it noted, "A number of courts have also found FCA liability violations where a defendant falsely certifies compliance with certain conditions required as a prerequisite for a government benefit or payment in order to induce that benefit. In such cases, false certification for the purpose of receiving a payment or benefit becomes the practical equivalent of a statutory false claim." United States ex rel. Karvelas v. Melrose-Wakefield Hosp., 360 F.3d 220, 232 (1st Cir. 2004) (citation omitted) (involving FCA claims for Medicare and Medicaid benefits).
Some courts have adopted a theory of implied certification which imposes liability under the FCA: "Where the government pays funds to a party and would not have paid those funds had it known of a violation of a law or regulation, the claim submitted for those funds contained an implied certification of compliance with the law or regulation and was fraudulent." United States ex rel. Pogue v. Diabetes Treatment Ctrs. of Am., Inc., 238 F. Supp. 2d 258, 264 (D.D.C. 2002) (listing courts that have also adopted some form of this so-called implied certification theory). However, many courts have also held, "Violations of laws, rules, or regulations alone do not create a cause of action under the FCA." United States ex rel. Hopper v. Anton, 91 F.3d 1261, 1266 (9th Cir. 1996) (holding that these regulatory violations do not give rise to a viable FCA action); see also United States ex rel. Hendow v. Univ. of Phoenix, 461 F.3d 1166, 1170-71 (9th Cir. 2006) (discussing "false certification" theory of liability under FCA). The Second Circuit has cautioned that "implied false certification is appropriately applied only when the underlying statute or regulation upon which the plaintiff relies expressly states the provider must comply in order to be paid." Mikes v. Straus, 274 F.3d 687, 700 (2d Cir. 2001) (rejecting argument that a claim for reimbursement for bad quality medical services violated the FCA) (Emphasis in original)
As Abbott correctly notes, the Medicare program requires providers to affirmatively certify that they have complied with the Anti-Kickback Statute; failure to comply with the kickback laws, therefore, is, in and of itself, a false statement to the government. See Pogue, 238 F. Supp. 2d at 264 (discussing kickback certifications under Medicare and holding that failure to comply with the kickback laws implicates the FCA). Thus, the government can state a claim under the FCA for an antecedent violation of the Anti-Kickback Statute for claims submitted through the Medicare program.
The government's complaint also alleges that the submissions of false claims based on fictitious AWPs to state Medicaid programs caused the federal government to pay for the false claims. (See, e.g., Compl. ¶ 82 (alleging that New York's reimbursement rates for Abbott's Vancomycin, which were subsidized by the United States Medicaid program, were inflated by Abbott's false reporting), Compl. ¶ 6 ("To get fraudulent claims paid by the United States, Abbott also routinely made false statements directly to state Medicaid programs.")) There is no parallel allegation that Medicaid, like Medicare, requires affirmative certification of compliance with anti-kickback laws. The fact that the claim for Medicaid reimbursement is made to the states, which then obtain reimbursement from the federal government, makes the case for liability under the FCA and Anti-Kickback Statute more complex. The parties have cited no federal caselaw that applies an implied certification theory in the federal Medicaid context, and the issue has not been extensively briefed. Because the FCA is a remedial statute that must be broadly read and compliance with the anti-kickback statute is a prerequisite to payment in the Medicare program, I conclude that the FCA is violated when a Medicaid claim is presented to the state government in violation of the Anti-Kickback statute, even if there is no express certification of compliance with the statute. United States v. Neifert-White, 390 U.S. 228, 232 (1968) (stating that the FCA should be read broadly because it is "intended to reach all types of fraud, without qualification, that might result in financial loss to the Government."); see also United States v. Lagerbusch, 361 F.2d 449, 449 (3d Cir. 1966) (the FCA covers "indirect mulcting of the [federal] government").
The Court now turns to the difficult issue of whether the government has properly pled a violation of the Anti-Kickback Statute. The government argues that Abbott violated the Anti-Kickback Statute because the publication of inflated AWPs constitutes an "offer" of illegal "remuneration" to its customers in the form of the promise of inflated reimbursement from the government. The government further argues that Abbott marketed the spreads of its drugs to medical providers in order to induce them to purchase its products. Defendant contends that while providers do receive an economic benefit from government reimbursement based on AWP, publication of false prices in the compendia, without more, cannot be viewed as an offer, even an indirect offer, of remuneration by Abbott. Abbott also contends that because the drugs are multi-source, and Medicare reimbursement is based on a median AWP for all sources, rather than the AWP published for the manufacturer's product, that such publication of inflated AWPs cannot be considered an offer or payment of remuneration.
The novel legal question is whether reporting a fraudulent AWP to publishers, without more, is an offer or payment of remuneration under the Anti-Kickback Statute. The First Circuit has had occasion to address the meaning of remuneration under the kickback statute in another context. The First Circuit used the dictionary definition of "`Remunerates' as meaning `to pay an equivalent for service.'" United States v. Bay State Ambulance and Hosp. Rental Serv., Inc., 874 F.2d 20, 30 (1st Cir. 1989) (citing United States v. Greber, 760 F.2d 68, 71 (3d Cir. 1985)). The Court held, "By including such items as kickbacks and bribes, the statute expands `remuneration' to cover situations where no service is performed. That a particular payment was a remuneration . . . rather than a kickback, does not foreclose the possibility that a violation nevertheless could exist." Id. (emphasis in original) (upholding conviction of defendant for giving a hospital official two cars, one of which was actually purchased through an agent of the sales corporation but ultimately titled to the agent, because such a transfer was an indirect form of remuneration).
Based on the requirement in the Anti-Kickback Statutes of an "offer" or "payment" of "remuneration," defendant has the better argument that mere publication of a false AWP, without more, does not constitute an offer of remuneration where reimbursement is based on a median of AWPs, as it is with Abbott's multi-source drugs. The Court does not address the harder question of whether the publication of a false AWP with the specific intent to induce purchase of its branded drug in conjunction with a strategy of "marketing the spread" to the providers constitutes an indirect offer or payment of remuneration. See, e.g., 68 Fed. Reg. 23731, 23736 (May 5, 2003) (Office of the Inspector General for Health and Human Services opining that "If a pharmaceutical manufacturer purposefully manipulates the AWP to increase its customers' profits by increasing the amount the federal health care programs reimburse its customers, the anti-kickback statute is implicated . . . In other words, it is illegal for a manufacturer knowingly to establish or inappropriately maintain a particular AWP if one purpose is to manipulate the `spread' to induce customers to purchase its product . . . The conjunction of manipulation of the AWP to induce customers to purchase a product with active marketing of the spread is strong evidence of the unlawful intent necessary to trigger the anti-kickback statute.").
As alleged, however, Abbott also directly offered kickbacks to providers with an allegedly improper intent to induce purchase of the drugs. This alone is sufficient to overcome the motion to dismiss. A determination of whether these rebates and discounts, together with marketing the spreads, trigger liability under the Anti-Kickback Statute in this gray area will inevitably be highly fact specific.
Therefore, the Court DENIES the motion to dismiss the Anti-Kickback claims under the False Claims Act.
C. Miscellaneous
The Court DENIES the motion to dismiss the claims under Rule 9(b) because the allegedly fraudulent AWP and spread for each drug was pleaded with particularity, see California ex rel. Ven-A-Care, slip op. at 8-11; DENIES the motion to dismiss based on the government's knowledge of the fraud, see id. at 16-17; DENIES the motion to dismiss because there was no false claim,see id. at 11-17.; DENIES the motion to dismiss the fraud claim,see id.; and DENIES the motion to dismiss the unjust enrichment claim, see Massachusetts v. Mylan Labs., 357 F. Supp. 2d 314, 324 (D. Mass. 2005).
IV. ORDER
Defendant's motion to dismiss [Case No. 06-CV-11337, Docket No. 43, Attachment No. 39] is DENIED .