Sanofi to pay $19.8m for drugs overcharging

4 April 2017

The French pharmaceutical company Sanofi SA has agreed to pay $19.8m for overcharging the US Department of Veterans Affairs for two products between 2002 and 2011.

Under the Veterans Health Care Act, drug manufacturers cannot charge the Veterans Affairs (VA) Department more than a maximum amount, known as the Federal Ceiling Price, for certain drugs.

The US Department of Justice said Sanofi Pasteur, Sanofi SA’s vaccine division, disclosed to the VA Department in 2012 that it had made an accounting error over drugs prices in two contracts from 2007 to 2011.

However, a subsequent investigation by the VA’s Office of Inspector General determined that the accounting errors in fact dated back to 2002, resulting in an overcharge of $19,868,194.

Mark Myers, director of healthcare resources at the Office of Inspector General, said it was vital for suppliers to government departments to be open about their pricing.

“Overcharging VA depletes funds that are available to care for our veterans,” he said. “We will continue to hold companies accountable for errors in drug pricing.”

Neither the government nor the company has identified the products involved in the claims.

Under the settlement, in addition to paying $19.8m back to the VA Department, Sanofi Pasteur also agreed not to pursue claims for reimbursement for sales where it had undercharged the department.

The company, whose US division is based in Pennsylvania, said the settlement was a result of its own voluntary disclosure and it had acted in “good faith”.

“At all times, Sanofi Pasteur has cooperated fully and negotiated in good faith with the government since its voluntary disclosure in 2012 of the calculation and reporting error, and the company is committed to honouring its obligations under the Federal Supply Schedule contract,” a spokesperson said. 

“The parties agreed to the settlement to avoid delay, inconvenience and expenses of protracted litigation of the claims.”

The Justice Department confirmed that no lawsuit was filed and there has been no determination of liability.

Chad A Readler, acting assistant attorney general of the Justice Department’s Civil Division, said the government would continue to keep drugs companies’ pricing in check.

“It is important that pharmaceutical companies provide complete, accurate, and current information to the VA about the pricing of their drugs,” he said.

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