Merck Serono S.A., Genentech and other drug manufacturers are facing qui tam claims that they illegally received reimbursements from the government for unapproved vaccines and other biologic drugs. The False Claims Act (FCA) suit was unsealed last month in a New York federal court. The complaint alleges that Merck Serono S.A., Genentech Inc., Amgen Inc., Bayer Schering Pharma AG, Bristol-Myers Squibb and a number of other companies put patients at risk by conspiring with pharmacies and drug-packaging companies to repackage drugs with excess product in violation of approved labeling.
John F. Underwood, the relator, a former sales representative for Merck and Genentech, said the manufacturers entered into a scheme to overfill vials and pre-filled syringes with extra liquid solution or powder up to and exceeding the authorized amount. The overfill was allegedly marketed to heath care providers as a free dose that can be repackaged and billed to U.S. taxpayers. Underwood claimed the allegedly repackaged drugs weren’t eligible for coverage and reimbursement. The complaint says:
Although expansive in scope, the fraudulent scheme is straightforward. With the knowledge and participation of defendant health care providers and manufacturers, defendant repackagers unlawfully manipulated the licensed biologic drugs by repeatedly entering single-use and multi-use vials, extracting and/or pooling the overfill, and repackaging the product into smaller doses that are relabeled and replaced in interstate commerce for delivery to health care providers.
Biological products, or biologics, are a virus, vaccine, blood component or cure of cancer, anemia, multiple sclerosis and other diseases or conditions, according to the FCA suit. The biologics at issue in the suit are liquid and powder formulations that are intravenously infused or administered by injection in patients. Biologics are highly regulated, and their manufacture requires a valid biologics license, the complaint said. The U.S. Food and Drug Administration allegedly only approves a biologics licensing application after a showing that the biologic is safe, pure and potent and that it is made in a safe and effective manner.
Moreover, if a drug manufacturer contracts with another facility to package or repackage its products, the manufacturer must ensure that the repackager complies with certain standards, according to the complaint. Underwood claimed he has more than 30 years’ experience in marketing biologic and conventional drugs. He allegedly started working for Merck in 1972 and for Genentech in 1986, leaving the latter company in February 2005. The relator filed his sealed complaint in May 2010.
The complaint also names Johnson & Johnson, Genetech, Teva Pharmaceutical and Kaiser Permanente, among other Defendants. Underwood said that, during his time at Genetech, he discovered that the drug companies, pharmacies and pharmaceutical repackagers were conspiring to unpack, divide, repackage and relabel unlicensed biological drug, resulting in the adulteration and misbranding of products that were later administered to patients. It was alleged in the suit:
As a result of the acts and practices described herein, defendants subjected patients to increased risks of morbidity and mortality.
Underwood further accused the manufacturers and health care providers of receiving kickbacks as part of the alleged scheme. He said the defendants violated state FCA laws by submitting false claims through various state Medicaid and other health care programs in California, Illinois, New York and other states. The suit sought up to $11,000 for each alleged violation of federal anti-kickback laws, in addition to other relief.
The relator is represented by Andrew M. Beato, Robert F. Muse, Joshua A. Levy and Kerrie C. Dent of Stein Mitchell & Muse LLP. The case is in the U.S. District Court for the Eastern District of New York.
Contact us today for a free legal consultation with an experienced attorney.
Fields marked *may be required for submission.
If you would like to subscribe to the Jere Beasley Report digital edition, simply visit our Subscriptions page and provide the necessary information or call us at 800-898-2034.
Attorney Advertising - Prior results do not guarantee a similar outcome.