Abbott Labs Settles Texas Lawsuit Over Pricing
5 CommentsBy Ed Silverman // September 10th, 2008 // 7:56 am
The state of Texas is getting $28 million in a settlement over a lawsuit that alleged the drugmaker falsely reported wholesale drug prices to the state and federal Medicaid programs. The state will get $18 million in damages and $10 million in attorneys’ fees and costs.
“The windfall profits from these inflated reimbursements, which date back to the early 1990s, induced providers to favor Abbott Laboratories over other manufacturers. The result was a long-term, but unlawful, market niche for the company,” according to a statement by Texas Attorney Greg Abbott.
Abbott Laboratories did not admit to any wrongdoing in the settlement (here it is). The lawsuit was filed in 2004 on information from a whistleblower and, at the time, Abbott spun off its generic business to create Hospira. A related agreement will govern Hospira’s price-reporting practices.
The Texas attorney general has struck deals four other drugmakers after acting on info provided by Ven-a-Care of the Florida Keys. These include Schering-Plough/Warrick Pharmaceuticals in May 2004 ($27 million); Dey in June 2003 ($18.5 million); Boehringer Ingelheim/Roxane Laboratories in November 2005 ($10 million); and Baxter Healthcare in June 2006 ($8.5 million).
Enforcement actions against several other manufacturers, including Alpharma, Barr Pharmaceuticals, B Braun Medical, Parr Pharmaceutical and Watson Pharmaceuticals are pending, according to the AG.
PharmacistMike
Reading stories like this really chap by behind. Yes, it’s great that the state got the $18 million but do the lawyers really need the $10 million for the case? No. Texas now has lawyers in mansions and people that still need medical care. Likewise, Abbott, a large employer is losing growth potential. If you want to punish Abbott make them donate $8 million to charity and pay the lawyers $2 million as that should have been plenty.
Ima Misfit
PharmacistMike,
In Qui Tam cases like this one, attorneys fees are paid on top of the settlement amount. So the actual settlment for the alleged fraud was $18 million, and in addition, Abbott was required to pay attorney fees of $10 million.
Piper
Misfit:
Mike did not dispute your point, he was saying the lawyers did not deserve the full $10 million fee. Rather, they should have received just $2 million of it and donated the remaining $8 million to some worthy cause in Texas. He certainly has a point. Given that whistleblowers make it pretty easy to convict, I can’t imagine those guys were working to hard for the money….
Ima Misfit
Piper,
You’re right, PharmacistMike makes a good point.
I just gagged a bit at the thought of justifying the attorney’s fees in this case, but here goes.
This particular case was filed in TX in 2001 (I believe). It was then moved to Boston, along with dozens of other cases that were part of the AWP multi-district litigation. Then it was remanded back to Texas. Abbott filed numerous motions to fight each of these moves.
Abbott follows Big Pharma’s tried and true strategy of keeping these cases out of court by hiring a slew of high-priced attorneys who file a barrage of senseless motions and responses. The pharma companies fail to comply with subpoenas, and when they do produce documents, they send hundreds of thousands that are meaningless. The attorneys then have to sift through them all in order to find those few relevant documents.
Big pharma uses their endless supply of money and lawyers to outspend the plaintiffs and to keep these cases from going to trial.
You can bet that the plaintiff’s attorney’s fees of $10 million pales in comparison to the fees paid by Abbott to their lawyers.
PharmacistMike
Piper,
Thanks for the defense. The fact that lawyers received $10 seems excessive in my book.
Ima Misfit,
I can see your point in Big Pharma trying to outspend their troubles. I just wish the monies could be spent for something else besides a court room game of chase. Oh well.