Novartis to pay record $12.6M to settle HHS price-reporting claims

Novartis ($NVS) has agreed to pay the largest-ever settlement over allegations of inaccurate or outdated drug-price reporting to the federal government, HHS officials say. That's not saying much, however: This record-breaking settlement amounts to $12.64 million.

It's the latest example of a drugmaker running afoul of federal price-reporting rules, which require pharma companies to regularly submit average sales prices to the Center for Medicare and Medicaid Services. The pricing averages are used to calculate Medicare reimbursements (and for Medicaid, used to determine mandatory rebates).

Gregory Demske

In this case, Novartis' generics unit, Sandoz, allegedly misrepresented its average sales prices to CMS between January 2010 and March 2012. "Sandoz's misrepresentations undermined the integrity of the Medicare Part B drug pricing system; we will continue to penalize manufacturers that misrepresent or fail to timely file the required information," Gregory Demske, the HHS Office Inspector General's chief counsel, said in a statement.

A variety of drugmakers have inked settlements with state officials over allegations that they inflated or manipulated prices reported to Medicaid programs. Amgen ($AMGN) agreed in 2013 to shell out almost $11 million nationwide to settle claims that it reported false prices on several of its drugs, including big sellers Aranesp, Epogen and Neupogen. Louisiana's attorney general eked a total of $25 million out of 5 drugmakers in 2012 over similar allegations, with GlaxoSmithKline ($GSK) on the hook for the largest amount, $10 million, including some money to be paid to the federal government.

The other four drugmakers--Actavis ($ACT), Boehringer Ingelheim, Mylan's ($MYL) Dey Pharma unit, and Merck & Co.'s ($MRK) Schering-Plough--paid the remaining $15 million, and settled separately with the feds. Back in 2011, AstraZeneca ($AZN) paid $2.5 million to the state of Idaho over similar allegations. And earlier this year, Novartis reached a deal with Wisconsin's attorney general, on the eve of a trial over claims that the Swiss drugmaker artificially inflated the prices reported to the state's Medicaid program. Novartis called the state's claims "unfounded," but said it opted to settle to avoid protracted litigation.

- read the OIG's statement

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