September 10, 2007 Aventis Pharmaceuticals Inc.
Aventis Pharmaceuticals Inc.. (API) has agreed to pay over $190 Million Dollars to settle qui tam claims filed by a private relator, Ven-A-Care, of Florida.
The allegations of the case were that API engaged in a type of scheme known as “marketing the spread.”
Marketing the spread is a scheme within which the manufacturer of a drug or medical device provides a false inflated price for their product to the government, and then actually sells their product at a lower price to hospitals, clinics and/or doctors.
When a doctor buys the manufacturer’s drugs, and then seeks reimbursement from the federal government, the government reimburses the doctor at the falsely inflated price which had been reported to the government by the manufacturer.
This enables the hospitals, clinics and doctors to pocket the difference (known as “the spread”) between what the manufacturer actually charged them for the sale of the drug or device, and the higher amount which the government reimbursed the hospital, clinic or doctor for the drug or device.
The greater the difference, known as “the spread,” the greater the financial incentive for doctors and hospital to prescribe the manufacturer’s drugs, or devices.
Manufacturers can also defraud the government and market the spread, by providing rebates or substantial “free samples” of their drug or product to providers of medical services, thereby reducing the net price which the medical provider paid for the drugs or device, again enabling them to keep the difference between what they paid, and the amount of the reimbursement which they receive from Medicare, Medicaid or TRICARE.
Aventis agreed to pay $190 Million Dollars to settle claims that it marketed the spread in connection with Anzemet, an antiemtetic drug used primarily in conjunction with oncology and radiation treatment to prevent nausea and vomiting.
More specifically, the government alleged that Aventis engaged in a scheme to set and maintain fraudulent and inflated prices, knowing that federal health care programs would reimburse medical providers at those falsely inflated prices.
As part of the settlement Ven-A-Care is to receive over $32 Million for having filed the qui tam action.
See U.S. Dept of Justice Press Release 9/10/07