A top-10 pharmaceutical manufacturer paid $400 million in National Medicaid fraud settled in 2006. Even though the Medicaid Rebate Act requires BP reporting to include cash discounts, free goods contingent on other purchase requirements, volume discounts and any other rebates, BP reporting does not include discounts that are “merely nominal” in amount. The manufacturer thus devised a “nominal price” discount to market its products to hospitals, a discount the hospitals qualified for so long as they purchased set amounts. The company excluded these large discounts of more than 90 percent of AMP from its BP reporting, claiming that so long as the discount resulted in a price of less than 10 percent of AMP, as CMS defined the nominal price, the discount could be excluded from BP reporting. However, the legislative history of the Medicaid Rebate Act indicates that nominal price exclusion to BP reporting was intended to protect special purchasers, such as penny-a-pack birth control pills sold to Planned Parenthood. Congress was also clear that the overarching purpose of the Medicaid Rebate Act was to put Medicaid (the states and the taxpayers) on par with all other commercial purchasers, such as hospitals. The Deficit Reduction Act of 2005 further delineated the nominal price exclusion, and as of Jan. 1, 2007, only certain sales for less than 10 percent of AMP qualify.

 

A major pharmaceutical manufacturer paid $255 million under the False Claims Act. In August 2006, the manufacturer agreed to pay a total of $435 million to resolve criminal charges and civil liabilities in connection with illegal sales and marketing programs for its drugs for use in the treatment of brain tumors and metastases, and for use in treatment of superficial bladder cancer and hepatitis C. The settlement also involved claims involving best price violations for other drugs used in treating stomach ulcers.