It turns out it's not a good idea to kill the messenger, so to speak. As AmerisourceBergen found out, it can become an $885 million hit.
The country’s largest drug wholesaler agreed today to pay $625 million to resolve civil charges against the company that a former subsidiary repackaged millions of vials of cancer drugs to harvest and sell their overfills, making millions of dollars while putting cancer patients at risk of getting contaminated drugs. It was also accused of paying kickbacks to doctors.
According to the settlement unsealed by the Justice Department today, when Michael Mullen, the former chief operating officer of the unit, told his superiors of the practice, they fired him. Mullen then became a whistleblower.
“Greed must never be a part of medical decision making,” Scott J. Lampert, Health and Human Services special agent-in-charge, said in a statement. “(T)his settlement should serve as a warning to drug companies that are tempted to shortchange patient well-being.”
A subsidiary of AmerisourceBergen (ABC) separately pleaded guilty in September 2017 and agreed to pay $260 million in fines and forfeitures. Last year, it set aside $625 million to cover the civil agreement. That came after the $575 million the company originally accrued in the fourth quarter of 2017 resulted in a loss of $1.35 per share for the quarter.
"Medical Initiatives was voluntarily closed in 2014 and by entering into the corporate integrity agreement now, we are confirming both our commitment to compliance and to the continual evaluation and enhancement of our already robust compliance programs," the statement said.
The civil case stemmed from alleged violations of the federal False Claims Act. The DOJ has alleged that between 2001 and 2014, two of the wholesaler’s Alabama-based subsidiaries—Oncology Supply Co. and the now-defunct Medical Initiatives—prepared millions of syringes of cancer medicines, including Aloxi and Anzemet and generics of Neupogen and Procrit, in an unapproved facility.
According to the government’s allegations in the Alabama facility, employees removed drugs from their original glass vials and multiple vials of the product were pooled in untested plastic containers. That included the vials’ overfill, the extra amount drugmakers include to ensure a full dose is available.
“By harvesting the overfill, ABC was able to create more doses than it bought from the original vial manufacturers and avoid opening some of the vials,” the DOJ alleged. “ABC retained the unopened vials and sold them to other customers.” More than half of those vials were used for treatment on patients in federal healthcare programs where ABC made a profit over the years of about $100 million.
The settlement also resolves allegations that ABC gave kickbacks to physicians to induce them to purchase drugs through a prefilled syringe program. AmerisourceBergen was able to hide the kickbacks as pharmacy credits to doctors.
Mullen, who was represented by the Whistleblower Law Collaborative and Kellogg, Hansen, Todd, Figel & Frederick, will share a $99 million award with three colleagues who spoke up about the scheme.