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Pharmaceutical industry

Pharmacy Benefit Manager Medco Settles Kickback Allegations for $7.9 Million

Strategic Insights

— 2 min read

Medco Health Solutions Inc., a wholly-owned subsidiary of Express Scripts Holding Company, has agreed to pay $7.9 million to settle allegations that it engaged in a kickback scheme with pharmaceutical manufacturer AstraZeneca in violation of the False Claims Act. The scheme involved Medco soliciting remuneration from AstraZeneca in exchange for identifying Nexium as the "sole and exclusive" proton pump inhibitor on certain prescription drug lists, causing the submission of false or fraudulent claims for Nexium to the Retiree Drug Subsidy Program. The settlement resolves a lawsuit filed by former AstraZeneca employees Paul DiMattia and F. Folger Tuggle under the qui tam provision of the False Claims Act, which allows private citizens to bring civil actions on behalf of the government and to share in any recovery.

Key Takeaways:

  • Medco Health Solutions Inc. has agreed to pay $7.9 million to settle allegations that it engaged in a kickback scheme with AstraZeneca in violation of the False Claims Act.
  • The scheme involved Medco soliciting remuneration from AstraZeneca in exchange for identifying Nexium as the "sole and exclusive" proton pump inhibitor on certain prescription drug lists.
  • The settlement resolves allegations that Medco received some or all of the remuneration from AstraZeneca in the form of reduced prices on AstraZeneca drugs, including Prilosec, Toprol XL, and Plendil.
  • The United States alleged that the kickback arrangement between Medco and AstraZeneca caused the submission of false or fraudulent claims for Nexium to the Retiree Drug Subsidy Program.
  • The settlement was the result of a coordinated effort among the Civil Division, the U.S. Attorney's Office of the District of Delaware, and the HHS-OIG.
  • This settlement marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009.
  • Since January 2009, the Justice Department has recovered a total of more than $24 billion through False Claims Act cases, with more than $15.3 billion of that amount recovered in cases involving fraud against federal health care programs.
  • The False Claims Act lawsuit was filed in the U.S. District Court for the District of Delaware and is captioned United States ex rel. DiMattia et al. v. Medco Health Solutions, Inc., No. 13-1285 (D. Del.).

Statistics:

  • $7.9 million: The amount Medco Health Solutions Inc. agreed to pay to settle allegations that it engaged in a kickback scheme with AstraZeneca.
  • $24 billion: The total amount recovered by the Justice Department through False Claims Act cases since January 2009.
  • $15.3 billion: The amount recovered in cases involving fraud against federal health care programs since January 2009.
  • May 2009: The month the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative was announced.
  • January 2015: The month the United States and AstraZeneca reached a $7.9 million settlement to resolve kickback allegations arising out of the same conduct.

Sources:

  • U.S. Department of Justice
  • U.S. Attorney's Office of the District of Delaware
  • HHS-OIG
  • United States ex rel. DiMattia et al. v. Medco Health Solutions, Inc., No. 13-1285 (D. Del.)
  • Settlement Agreement between the United States and Medco Health Solutions Inc.
  • Press Release dated February 10, 2021, from the U.S. Department of Justice.

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