Potential costs to AmerisourceBergen from DOJ probe pile up to $835M

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Drug wholesaler AmerisourceBergen has more than doubled to $575 million, the amount of money is has set aide to fully resolve a federal investigation into its sales of syringes from an unregistered production facility.

TTalk is cheap until it involves negotiations to settle a federal probe. That is the experience of wholesaler AmerisourceBergen, which now sees costs to resolve federal investigations into its sales of prefilled syringes of cancer medications potentially reaching $835 million.

The company made the disclosure in its fourth-quarter earnings announcement, reporting that the $575 million in accrued charges led to a loss of $1.35 per share for the quarter compared to a gain of $0.64 EPS in the same period a year ago. Excluding the one-time cost, the company earned $1.33 per share, slightly more than what analysts forecast. The disclosure came as the company reported revenue of $39.1 billion, up 4%.

RELATED: AmerisourceBergen to pay $260M in case over production of sterile cancer medicines

That set aside is on top of of the $260 million it agreed to pay after pleading guilty to a misdemeanor charge that for more than a decade it had produced and sold millions of syringes from an Alabama facility that was never registered with the FDA. The federal misdemeanor charge said 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 the unapproved facility.

At the time, it said it was having ongoing discussions with the DOJ on another phase of the case in which the feds intended to pursue civil claims under the False Claims Act.

RELATED: AmerisourceBergen sees end in sight for industrywide generics woes

While the litigation costs undercut the quarter, AmerisourceBergen CEO Steven Collis told Reuters last week that there may be light at the end of the tunnel when it comes to generic price erosion. 

"It's still high, but it's not getting worse, which we think is a positive," Collis told the outlet.

That view, however, ran counter to what generic drugmakers have been saying during the earnings report. Teva, the world’s largest generic drugmaker, reported price erosion on its base business rose to 10% from 6% for the third quarter, while interim CFO Mike McClellan pointed to a “lack of visibility” that has led Teva to walk back its 2017 forecast three times so far.