On Monday, October 1, 2018, the United States Department of Justice (DOJ) announced a $625 million agreement to resolve civil fraud charges over the sale of syringes containing drugs for cancer patients, double billing, and providing kickbacks to doctors. The $625 million settlement brings the total payout relating to the repackaging and distribution of pre-filled syringes to $885 million (as noted below).
AmerisourceBergen has also admitted that from January 2001 to January 2014, a pharmacy unit in Alabama shipped millions of syringes for patients undergoing chemotherapy from an unsterile environment. According to authorities, AmerisourceBergen would harvest “overfill” from the original vials of such drugs as Aloxi, Anzemet, Kytril and generic Kytril, Neupogen and Procrit used to combat side effects of chemotherapy, such as nausea and anemia, and then create new doses from the overfill. This allowed the company to create more doses of the drugs than it bought and generate around $100 million in extra profit.
AmerisourceBergen was also accused of billing multiple doctors for individual vials, causing them to bill the government more than once, and paying kickbacks to induce doctors to buy drugs through the pre-filled syringe program.
In this case, Michael Mullen, the former chief operating officer of a subsidiary of AmerisourceBergen played a key role in the settlement as a high-level executive whistleblower. “Mr. Mullen courageously spoke up internally about compliance issues, which cost him his job, and then alerted law enforcement of his concerns after vetting his claims with whistleblower attorneys,” said Mr. Mullen’s attorney, Bob Thomas. “He did the right thing, and we are immensely proud of him.”
Mullen provided the operational knowledge necessary to detect AmerisourceBergen’s violations of federal and state laws. His amended qui tam complaint details AmerisourceBergen’s overfill laundering scheme and the executives who knew about the oncology business model and regulatory issues, including the former and current AmerisourceBergen CEOs. For his whistleblowing efforts, he will share in the $99 million of the settlement apportioned to whistleblowers.
More of the Same
This is related to the announcement, roughly one year ago at the end of September 2017, when the company pled guilty to illegally distributing misbranded drugs and agreed to pay $260 million to resolve criminal liability for its distribution of oncology-supportive-care drugs from a facility that was not registered with the United States Food and Drug Administration (FDA).
As part of that guilty plea, the company agreed to pay a $208 million criminal fine, plus $52 million in criminal forfeiture, for a total financial penalty of $260 million. In addition, the company entered into an agreement with the Office and the Department of Justice’s Consumer Protection Branch to maintain a compliance and ethics program designed to increase accountability of individuals and corporate board members, to increase transparency, and to strengthen the company’s compliance with the FDCA. The compliance and ethics program requires corporate board members to review annually the effectiveness of the company’s compliance program and for the company to maintain a hotline that will receive and process complaints about any improper practices.
“The $885 million combined civil and criminal resolution with ABC underscores our determination to utilize all tools at our disposal to pursue illicit schemes that seek to profit from circumvention of important safeguards designed to protect the nation’s drug supply,” said Assistant Attorney General Joseph H. Hunt. “We will continue to be particularly vigilant where these schemes put the health and safety of vulnerable patients at risk.”
In a statement following the most recent settlement, AmerisourceBergen said the settlement reflects its acknowledgment that some practices at the now-closed Medical Initiatives unit “were not consistent with AmerisourceBergen’s approach to corporate compliance.”