Pharmaceutical company, Mylan, has been in news for issues regarding the pricing of its “EpiPen” product, an allergy treatment drug. The drug company has been under intense scrutiny since raising the price of EpiPen to more than $600.00 for a pack of two (up from about $100.00 per pack in 2007).
As a result of this scrutiny, federal investigators have previously indicated that Mylan may have violated the False Claims Act by classifying EpiPen as a “generic” drug, as opposed to an “innovator” drug, under the Medicaid Drug Rebate Program. That classification allowed the company to pay a lower percentage of its revenues back to the government in the form of rebates.
The False Claims Act is one of the Federal government’s most effective tools in combating fraud and abuse. The Act essentially prohibits any person or entity from knowingly filing a false or fraudulent claim for payment with the Federal government (including any plan or program that provides health benefits, such as Medicare or Medicaid). “Knowingly” includes having actual knowledge that a claim is false or acting with “reckless disregard” as to whether a claim is false. Violations under the federal False Claims Act can result in significant fines and penalties, including recovery of three times the amount of the false claim(s), plus an additional penalty of $5,500.00 to $11,000.00 per claim.
In response to the alleged violations of the False Claims Act, Mylan recently announced that it had reached a $465 million settlement with various government agencies. This settlement is representative of an overall trend of increasing enforcement in healthcare fraud and abuse cases, including cases involving the False Claims Act. As a result, healthcare providers would be advised to carefully structure all aspects of their business operations in order to ensure compliance with the various fraud and abuse laws.
The attorneys at Fitzpatrick Lentz & Bubba have extensive experience advising hospitals, practitioners and other healthcare providers on a wide range of healthcare law matters, including fraud and abuse issues. For more information, please contact Kenneth Charette or any other attorney in our HealthCare Group.