Sanofi Pasteur agreed to pay more than $19.8 million to settle allegations that it overcharged the Department of Veterans Affairs for its products.
The French pharma’s vaccines unit voluntarily reported the “calculation and reporting error” with the VA in 2012, and has since “cooperated fully and negotiated in good faith with the government,” according to a statement from the company.
Sanofi Pasteur based its first disclosure to the U.S. government on products sold to the VA from 2007 to 2011. A follow-up investigation by the VA's Office of Inspector General found the overcharging error dated back to 2002, the DOJ said in a statement.
The Veterans Health Care Act mandates that pharma companies charge the so-called federal ceiling price (FCP) for their drugs. The FCPs for certain drugs are exactly what Sanofi Pasteur miscalculated in this case.
Sanofi said that, for some products, the miscalculation led to a lower price to the VA. The company will not seek reimbursement for those undercharges, it said. Neither the DOJ nor Sanofi identified the products involved.
This is not the first settlement in a pharma overpricing case. A range of drugmakers have paid settlements to wrap up improper billing allegations, which often fall under the False Claims Act (FCA), which governs overcharging for Medicare, Medicaid and other government programs. The most prominent recent case was Mylan’s $465 million deal to settle allegations that it overcharged Medicaid for EpiPens.
Sanofi itself has paid millions to resolve FCA allegations. In 2012, Sanofi U.S. forked over $109 million in an FCA investigation regarding its knee injection, Hyalgan. Sanofi allegedly used free samples as kickbacks to lower the drug’s effective price, to avoid cutting its actual invoiced price and trigger lower reimbursements. Federal prosecutors said Medicare and other federal healthcare programs paid millions of dollars in kickback-tainted claims for Hyalgan.
A 2009 case saw Sanofi’s Aventis unit pay $95.5 million to settle claims that it avoided reporting the “best price” for nasal spray meds and thus dodged millions in rebate payments to Medicaid.
The DOJ has recovered more than $4.7 billion through FCA cases in fiscal 2016; among them, $2.5 billion came from the healthcare industry, including drug and medical device companies, hospitals and nursing homes, labs and physicians.