Even as Boehringer Ingelheim Pharmaceuticals Inc. enjoys rapidly escalating revenue and accolades for its sales force, it is battling government lawyers”™ claims that a subsidiary improperly inflated wholesale drug prices it reports in order to help client pharmacies sell drugs.
The company has asked a Massachusetts judge to dismiss allegations it cheated the Medicare and Medicaid programs, poking holes in the government”™s case and saying the claims are largely barred by the statute of limitations.
Boehringer Ingelheim, which has its U.S. headquarters in Ridgefield, acquired Ohio-based Roxane in 1978. The generic drugs in question are used to treat a range of illnesses, symptoms and conditions, including heart ailments and side effects of chemotherapy and radiation. Roxane sold three of the drug lines in question to Elan in 2001.
Government lawyers claim that Boehringer-Ingelheim”™s Roxane unit fed false drug prices into Red Book, First DataBank, and Medispan, online medical directories that include price lists that Medicare, Medicaid and insurance companies rely on to set their reimbursement rates.
Roxane allegedly then sold the drugs for far lower prices, while advertising the spread between the drugs it sells versus the government listed price to spur additional direct sales.
Government attorneys hope to prove that puts the company in violation of federal kickback rules, which prohibit inducing people to purchase federally funded medical items.
Boehringer calls that a “creative interpretation” of the term kickback, saying the term refers only to actual payments made between parties.
U.S. lawyers did not initially specify the financial penalty they would seek if the case proceeds to trial. The government says it is entitled to damages, plus civil penalties between $5,000 and $11,000 for each violation.
The lawsuit was spurred by a Key West, Fla. pharmacy, which as a federal whistleblower could receive nearly a third of any monetary penalty if the government wins, though the U.S. Supreme Court last week tightened whistleblower reimbursement rules, ruling they must have been the source of the original information of a complaint, rather than simply passing on hearsay to authorities.
In its defense, Boehringer Ingelheim states that the government itself acquiesces in the practice to further policy goals regarding drug prices.
Boehringer Ingelheim notes the government does not allege that Roxane received any funds from the Medicaid or Medicare programs, and says that evidence covering the period prior to early 2001 is barred under the statute of limitations.
The U.S. government is scheduled to file an opposition brief by late April, with both sides getting the opportunity to again make counter-arguments in May.
The lawsuit dampened what had otherwise been a month of sunny tidings for Boehringer Ingelheim. The company”™s German parent reported a banner 2006, with a $2.3 billion profit on $14.2 billion in revenue, driven by three blockbuster drugs.
Boehringer Ingelheim also was tabbed as having one of the two most effective sales forces, along with Bristol-Myers Squibb Co., in a survey of 20,000 doctors conducted by TargetRx Inc., a pharmaceutical consulting firm.
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