January 14, 2010 – At least a dozen 340B hospitals were included in a state-only settlement announced Jan. 7 with Abbott Laboratories and its French drug licensor, Fournier, signaling that there could be more such deals clinched in coming years.
Until now, 340B providers have typically been included in global settlements brokered by the U.S. Department of Justice. Increasingly, however, states are pursuing their own settlements with drug companies over pricing fraud, marketing irregularities and other alleged infractions.
In all, nearly 30 hospitals in Florida and New York are listed as beneficiaries in the case, Florida v. Abbott Laboratories. A list of the hospitals is available at the end of this settlement document.
Illinois-based Abbott and Fournier agreed to pay $22.5 million to settle allegations that they sought to thwart generic competition to TriCor, a drug used to treat high cholesterol and triglycerides.
New York will receive the lion share, $4.5 million, and 22 other states and the District of Columbia will split the rest of the damages.
Florida’s Attorney General’s Office, which led the case against Abbott and Fournier, said that it was up to each state to invite hospitals to participate in the lawsuit. In at least a couple of cases, hospitals that were originally listed as claimants in the case later dropped out.
The University of Washington Medical Center in Seattle decided not to proceed because of the extensive data collection it had to conduct to support its claim, and because the hospital’s total purchases of TriCor had been relatively small, said Don Bomgaars, UW Medical Center’s assistant director of pharmacy services.
“In the end, the settlement would barely have covered what we’d spend in resources on the case, so we decided it wasn’t worth it,” he said.
States: Companies manipulated drug formulas to stall competition
The states accused the drug makers of making slight changes to the drug formula that had no real benefits to patients. This allowed them to circumvent drug substitution laws, and prevented pharmacists from dispensing cheaper, generic versions of the drug to patients.
The states also said the companies filed unjustified lawsuits to stall federal approval of generic drugs. As a result, they argued, Abbott and Fournier were able to charge a premium for TriCor, which yielded $1 billion in U.S. sales in 2009.
“These companies deprived taxpayers, state agencies, and consumers of a fair marketplace…and that cannot be tolerated,” New York Attorney General Mario Cuomo said in a statement.
Drug makers defend their actions
The companies have denied any wrongdoing. “Abbott and Fournier have agreed to settle the lawsuits filed by the (states) to avoid the uncertainty of ongoing litigation,” said Adelle Infante, Abbott’s manager of external communications. “We continue to believe our actions were lawful.”
The defendants are to wire a total of $16.6 million to state government agencies “and other entities” within 10 business days of receiving transfer instructions from the states, the settlement says. The rest of the settlement will cover legal fees and costs incurred by the states.