On October 15, 2021, Astellas Pharma U.S., Inc., reached an $18 million settlement for alleged False Claims Act violations. The Relator, a former executive of a network of regional drug wholesalers, alleged that the company underpaid manufacturer rebates under the Medicaid Drug Rebate Program, thereby violating the False Claims Act.
In November 2014, the Relator filed a qui tam lawsuit alleging that the Covered Conduct took place from October 1, 2007, through March 31, 2016. According to the settlement, Astellas was required to report the Average Manufacturer Price (AMP) for each of its covered outpatient drugs to the Centers for Medicare and Medicaid Services (CMS) on a monthly and quarterly basis under the Medicaid Drug Rebate Program. Astellas was also to pay quarterly rebates to state Medicaid programs based (at least in part) on the quarterly AMPs.
Astellas allegedly entered into services agreements with various wholesalers to distribute and sell selected drugs. Under the services agreements, Astellas paid the wholesalers to perform specified services.
For the quarterly rebate periods from October 1, 2007, through March 31, 2016, Astellas allegedly improperly treated compensation provided to the wholesalers under the services agreements as price reductions – not bona fide service fees – when calculating and reporting quarterly AMPs to CMS. As a result of that reporting, Astellas allegedly underpaid quarterly rebates that were owed to the states for Covered Drugs under the Medicaid Drug Rebate Program and caused the United States to overpay for its payments to the states for the Medicaid Program.
While Astellas denies the allegations, the parties reached the settlement to “avoid the delay, uncertainty, inconvenience, and expense of protracted litigation of the above claims.”
Astellas will pay $18 million to settle these claims, $9 million of which is restitution. In addition to the $18 million, Astellas will pay $950,000 in attorney’s fees, costs, and expenses, to the Relator’s attorney.
This is not the first successful False Claims Act lawsuit brought by this relator, as he has helped the Medicaid program recover more than $150 million, including a $75 million settlement with Bristol Myers Squibb earlier this year.