Consumer Fraud

AmerisourceBergen Pays U.S. $625 Million, Resolving Illegal Drug Repackaging Scheme

whistleblower 2 370x210 AmerisourceBergen Pays U.S. $625 Million, Resolving Illegal Drug Repackaging SchemeAmerisourceBergen Corp. and four subsidiary companies will pay $625 million to settle allegations that they ran a profiteering scheme that involved buying sterile vials of drugs from manufacturers, breaking them open, pooling the contents, and then repackaging them into pre-filled syringes.

AmerisourceBergen, a drug wholesaler that ranks number 11 on the Fortune 500 list, provided the illegally repackaged drugs to physicians treating cancer patients, the U.S. Department of Justice said in its announcement of the settlement.

Federal prosecutors alleged that AmerisourceBergen profited by skimming drug overfill from the FDA-approved sterile vials and repacking them into pre-filled syringes. They said the company did this through its Dothan, Alabama-based subsidiary Medical Initiatives Inc., which shipped millions of the repackaged syringes to oncology practices. AmerisourceBergen misrepresented the purpose of Medical Initiatives to federal regulators, claiming it was a pharmacy.

The drugs AmerisourceBergen repackaged included Procrit, Aloxi, Kytril and its generic form granisetron, Anzemet, and Neupogen. These drugs were often re-processed in non-sterile conditions, and they were sometimes contaminated, U.S. prosecutors said.

“ABC placed corporate profits over patients’ needs, endangering the health of vulnerable cancer patients,” said Richard P. Donoghue, U.S. Attorney for the Eastern District of New York.

Because its operations were against the law, AmerisourceBergen failed to submit data to the U.S. Food and Drug Administration (FDA) proving the safety and efficacy of the repackaged drugs, the Justice Department said.

By skimming the drug overfills and repackaging them, AmerisourceBergen was able to sell more doses than it bought. The repackaging scheme also allowed the company to bill multiple healthbcare providers for the exact same vial of drug. Those providers then billed Medicare, Medicaid, TRICARE, the VA, and other federal health care programs for the same vial.

AmerisourceBergen’s scheme was not just hugely profitable, it also allowed the company to boost its market share with product discounts, which it leveraged to lure new customers, and to keep its existing customers.

The settlement also resolves allegations that AmerisourceBergen provided kickbacks to doctors to induce them to purchase Procrit in pre-filled syringes. The kickbacks came as general pharmacy credits provided to customers, but which were not identifiable as specific to Procrit on invoices.

AmerisourceBergen Specialty Group, one of the corporation’s subsidiaries, last year pleaded guilty to illegally distributing misbranded drugs and paid the U.S. $260 million to resolve criminal charges for distributing drugs from a facility that was not registered with the FDA.

The civil charges that Amerisource settled this week stemmed from allegations made in three whistleblower lawsuits. The whistleblowers filed their lawsuits against AmerisourceBergen under the False Claims Act, which allows private parties to file suit on behalf of the U.S. government in cases of fraud and other wrongdoing that harms U.S. taxpayers.

The whistleblowers who tipped off the government to the massive fraud will share an award of $93 million.