TALLAHASSEE, Fla.—Attorney General Pam Bondi today announced a $625 million multistate and federal settlement with a major pharmaceutical distributor. The settlement resolves allegations that AmerisourceBergen Corporations introduced adulterated drugs into interstate commerce. As a result, ABC, a Delaware corporation headquartered in Chesterbrook, Pennsylvania, will pay the states and the federal government $625 million dollars—including nearly $100 million going directly the state Medicaid programs.
As part of the massive national litigation, ABC subsidiary AmerisourceBergen Specialty Group pled guilty to illegally distributing misbranded drugs in September 2017. ABSG is the parent entity for companies in the specialty pharmaceutical market, including biotechnology and oncology, in addition to pharmaceutical manufacturers and providers. ABSG agreed to pay $260 million in criminal fines and forfeitures.
The national federal and state civil settlement resolves allegations concerning conduct of a purported pharmacy ABSG opened in Dothan, Alabama named Medical Initiatives, Inc. MII pooled vials of oncology supportive care drugs used during chemotherapy to create Pre-filled Syringes to sell to practitioners. The drugs involved in the scheme include Aloxi®, Anzemet®, Kytril®, Neupogen®, Procrit®, as well as the generic version of Kytril®. The investigation revealed that MII was not a pharmacy, but a repackager, and as such, required to apply for a New Drug Application for the PFS. To prepare the PFS, MII broke the seal of the FDA-approved drug vials and repackaged them into plastic syringes that allowed MII to sell the excess drug product in the vials, known as overfill. The PFS, that were prepared in an unsterile environment and often contained particles of foreign matter, were then shipped to providers through another branch of ABSG, Oncology Supply Company.
MII was neither a pharmacy in producing and selling the PFS nor did it comply with pharmacy regulations in any state where it was licensed. Additionally, since there was no new NDA, the drugs were unapproved by the FDA and adulterated, therefore not eligible for reimbursement by government healthcare programs. The civil settlement also resolves double billing for the same vial of drug as a result of using the overfill drug product and unlawful kickbacks provided to physicians to induce them to purchase Procrit® in PFS rather than vials.
The investigation resulted from three qui tam actions originally filed in 2010, 2012 and 2014 in the United States District Court for the Eastern District of New York under the federal False Claims Act and various state false claims statutes. As part of the settlement Florida will receive nearly five million dollars in restitution and other recoveries.
A National Association of Medicaid Fraud Control Units Team participated in the investigation and conducted the settlement negotiations with ABC on behalf of the states. The Team included representatives from the Offices of the Attorneys General for the states of California, Florida, Illinois, New York and Oregon.