Assistant Attorney General Tony West Speaks at Press Conference Announcing Major Settlements with Pharmaceutical Manufacturers

Good morning and welcome.  My name is Tony West, and I’m the Assistant Attorney General for the Civil Division of the Department of Justice.  In that capacity I oversee much of the federal government’s civil litigation across the country.  I am pleased this morning to be joined by three great colleagues and friends:  Carmen Ortiz, the United States Attorney for the District of Massachusetts; Wifredo Ferrer, the United States Attorney for the Southern District of Florida; and Dan Levinson, the Inspector General of the Department of Health and Human Services.  

Over the last two years, the Justice Department—in close collaboration with the Department of Health and Human Services—has made cracking down on health care fraud a top priority.  Today, we announce the latest results of those efforts.  We have reached significant settlements with three drug companies—Abbott Laboratories, Inc.; Roxane Laboratories, Inc.; and B. Braun Medical, Inc.—settlements that will collectively return more than $421 million to the Medicare and Medicaid programs.  These settlements stem from lawsuits in which we’ve alleged that these companies engaged in a complicated and complex scheme to market their drugs through an unlawful pricing arrangement that amounted to kickbacks funded by taxpayer dollars. 

Now before my colleagues and I describe the details of this elaborate scheme, let me note that these cases are the latest in a string of settlements, judgments, convictions and fines that are part of Attorney General Eric Holder’s aggressive effort to combat fraud in all its forms over the last two years.  In fact, I’m pleased to announce, that since January 2009, the Civil Division, working closely with our U.S. Attorney partners around the country, has recovered more money lost to fraud than ever before—over $9 billion in civil and criminal cases involving fraud on American taxpayers and consumers; a staggering and unprecedented amount that represents the largest two-year fraud recovery in the Department’s history. 

The cases that make up that record-breaking amount cover the full spectrum of Civil Division fraud cases:  from the financial fraud cases like mortgage fraud that victimize homeowners who are already struggling to hold on to their homes; to procurement fraud cases involving substandard provisions supplied to our troops in Iraq and Afghanistan; to the investor fraud scams involving fake business opportunities that cheat honest small businesspeople out of their hard-earned investments.  Together, these cases represent an aggressive, coordinated and sustained effort at the federal level to hold perpetrators of fraud accountable, be they large companies or individuals –and over the last two years we have done just that.

Over half of that record-breaking sum—more than $5 billion—is comprised of health care fraud cases like the settlements against Abbott, Roxane and B. Braun we are announcing today.  

These three cases involve something called the AWP, or “Average Wholesale Price.”  That’s the price companies report to published national pricing lists as the price of their drugs.  The government uses these same price lists to pay health care providers who purchased those drugs for their Medicare and Medicaid patients.

Now this was the honor system:  companies were supposed to report the Average Wholesale Price they were actually charging for their drugs, but in fact, we allege, that’s not what they did.  Instead, the AWP reported by these defendants—the same prices used by the government to pay providers—were greatly inflated.  This allowed drug companies to create an incentive for the purchase of their drugs, since buyers could pay the drug companies one price and obtain government payment at an inflated price and pocket the difference—essentially a kickback scheme funded by taxpayer dollars.  Not only did this practice cost our public healthcare programs millions of dollars, it also threatened to undermine the integrity of the choices health care providers made for their patients.

In fact, this practice within the pharmaceutical industry was widespread—so much so that instead of Average Wholesale Price, “AWP,” it was jokingly said, really stood for:  “Ain’t What’s Paid.”   Indeed, the only purchasers who paid the inflated, reported drug price were you, the American taxpayers. 

Now, this was a very complicated and hard-fought case that required years of tireless, persistent and dedicated work by our lawyers, paralegals and investigators here in the Civil Division, in the U.S. Attorneys Offices for Massachusetts and the Southern District of Florida and in the HHS Office of Inspector General, especially over the last three years.  Without them, this important victory for our public healthcare programs would not have occurred.  It’s a reminder of the high commitment to public service our federal civil servants embody.

And now it’s my pleasure to introduce the United States Attorney for the District of Massachusetts, Carmen Ortiz.