Aventis To Pay Through The Nose For Misreporting Price Of Nasal Spray

The Department of Justice announced last week that it has entered into a multi-million dollar civil settlement agreement with Aventis Pharmaceutical, Inc., a subsidiary of Sanofi Aventis U.S. LLC.  Under the agreement, Aventis will pay more than $95 million to settle allegations that it violated the False Claims Act by misreporting drug prices to reduce its Medicaid Drug Rebate obligations. 

 The Medical Drug Rebate statute required Aventis to report its lowest prices charged to commercial customers and to pay quarterly rebates to Medicaid participating states based on those reported prices.  Allegedly, between 1995 and 2000 Aventis and its corporate predecessors knowingly misreported prices of three steroid-based nasal sprays (Azmacort, Nasacort, and Nasacort AQ) by repackaging the identical products under a different label and selling them to the HMO Kaiser Permanente at a reduced price.  By selling the products for reduced prices under different labels, Aventis allegedly avoided paying millions of dollars in rebates to the Medicaid system and overcharged certain public health service entities. 

 Under the settlement agreement, Aventis will pay approximately $49 million to the federal government, over $40 million to the Medicaid participating states, and over $6 million to certain public health service entities who allegedly paid inflated prices for the drugs.  Tony West, Assistant Attorney General for the Justice Department’s Civil Division stated that, “This agreement reflects our commitment to ensuring that Aventis and other drug companies fulfill their obligations under the Drug Rebate Statute to accurately report pricing information and pass the savings along to the Medicaid program.”  He went on to say that the Department of Justice “will continue to ensure that programs for the most vulnerable portions of our population do not pay any more for pharmaceutical products than they should under the law.”

 Although most False Claims Act cases are initiated by qui tam relators who blow the whistle on corporate fraud, the Aventis case appears to have been initiated by the government itself.  The Aventis case was handled by the Justice Department’s Civil Division, the Department of Health and Human Services Office of Inspector General and Office of Counsel to the Inspector General, and the National Association of Medicaid Fraud Control Units.

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