On the heels of news that drug companies have overtaken defense as government fraudsters, Dey Pharma has agreed to pay $280 million to settle a Justice Department lawsuit over Medicare and Medicaid reimbursements. Dey did not admit wrongdoing as part of the settlement.
According to the DoJ, Dey reported inflated prices on several drugs, including Albuterol, to both government healthcare programs. That pricing move caused Medicare and Medicaid to overpay for the meds on millions of claims, the department maintains.
Merck KGaA will pay the settlement and related costs, even though U.S.-based Mylan now owns the pharma unit. Mylan bought the pharma unit in 2007, after the DoJ filed suit, and so Merck agreed to foot the bill. The German company will book a "double-digit million euro" charge this year to help pay for the settlement; it had already been setting aside money for the purpose, but that provision wasn't enough.
With this settlement, the DoJ has now recovered more than $2 billion from drugmakers that allegedly inflated prices in the same way. According to the department, Dey and other pharma companies offered customers one price and then reported higher prices to the government, allowing buyers to profit on the difference. "Taxpayer-funded kickback schemes like this not only cost federal healthcare programs millions of dollars, they [also] threaten to undermine the integrity of the choices healthcare providers make for their patients," according to Tony West, assistant AG for the DoJ's Civil Division.