Department of Justice Seal Department of Justice
THURSDAY, MAY 18, 2006
(202) 514-2007
TDD (202) 514-1888

United States Intervenes in Suit Against Abbott Laboratories Inc.

WASHINGTON, D.C. – The United States has intervened in a whistleblower suit filed against Abbott Laboratories Inc. (Abbott), alleging that the company violated the False Claims Act, the Department of Justice announced today. In its complaint, the government alleges that Abbott—a pharmaceutical manufacturer that sells brand and generic drugs that are reimbursed by the Medicare and Medicaid programs—engaged in a scheme to report fraudulent and inflated prices for several pharmaceutical products, knowing that federal healthcare programs established reimbursement rates based on those reported prices.

The government’s complaint alleges that from at least on or before January 1, 1991 Abbott’s Hospital Products Division (HPD) reported prices that were more than 10 times (1000 percent) the actual sales prices on many of the drugs it manufactures. The United States alleges that federal healthcare programs, both Medicare and Medicaid, have reimbursed Abbott’s customers in excess of $175 million for the drugs which are the subject of the complaint.

The difference between the inflated government reimbursement rates and the actual price paid by healthcare providers for a drug is referred to as the “spread.” The larger the spread on a drug, the larger the profit or return on investment for the provider. The United States alleges that Abbott used artificially inflated spreads to market, promote, and sell the drugs to existing and potential customers. Because reimbursement from federal programs was based on the fraudulent inflated prices, the United States contends that Abbott caused false and fraudulent claims to be submitted to federal healthcare programs.

“This complaint marks another step in the government’s investigation and prosecution of pharmaceutical manufacturers who submit fraudulent drug pricing information that costs the federal healthcare programs and taxpayers millions of dollars,” said Assistant Attorney General Peter D. Keisler, of the Justice Department's Civil Division.

“The filing of this lawsuit reflects the government’s dedication to pursuing large-scale pharmaceutical pricing fraud cases that squander scarce resources needed to provide for the health care needs of the poor, the elderly and the disabled,” said R. Alexander Acosta, U.S. Attorney for the Southern District of Florida.

The investigation began after the filing of a civil False Claims Act suit by a local home-infusion company, Ven-A-Care of the Florida Keys Inc., and its principals. The civil False Claims Act allows for private persons to file whistleblower suits to provide the government information about wrongdoing. Under the statute, if it is established that a person has submitted or caused others to submit false or fraudulent claims to the United States, the government can recover treble damages and $5,500 to $11,000 for each false or fraudulent claim filed. If the government is successful in resolving or litigating its claims, the whistleblower who initiated the action can receive a share of between 15 percent to 25 percent of the amount recovered.

The law suit, called a qui tam action, was filed in the U.S. District Court for the Southern District of Florida and was assigned to U.S. District Court Judge Alan Gold. This investigation was conducted by the U.S. Department of Justice, the U.S. Attorney's Office for the Southern District of Florida, and the Office of Inspector General of the Department of Health and Human Services.