Rising Pharmaceuticals: The Deal Between Competitors
The Rising Pharmaceuticals price fixing resolution included an agreement to pay approximately $1.1 million under the False Claims Act. The generic-drug supplier faced allegations that it paid and received remuneration through arrangements on price, supply and allocation of customers with another pharmaceutical manufacturer for certain generic drugs, and that its sales of those drugs resulted in claims to Medicare and Medicaid. Earlier that year, Heritage Pharmaceuticals had agreed to a civil settlement of more than $7 million over similar arrangements.
The Department of Justice announced Rising’s civil resolution on December 3, 2019, covering alleged conduct from 2013 to 2016. The case belongs among pharmaceutical fraud cases because an arrangement between suppliers can reach all the way to the public program paying for the prescription.
Customer Allocation Takes Competition Out of the Sale
Customer allocation means competitors agreeing on who gets particular customers. Alongside an agreement on price, it deprives a buyer of both a competitive offer and a supplier willing to take the business away from the existing supplier. An agreement about who gets the business can take competition out of the sale before the buyer ever asks for a better offer.
Put those decisions together and a buyer can encounter different company names without getting the independent competition those names suggest. The choice exists on the supplier list. The competitors have already agreed how to divide the business.
For a sales or contracting employee, that makes the customer account part of the story. Knowledge of why a company pursued one account and left another alone can explain something a price sheet cannot. The useful connection is between the agreement with a competitor and the decisions made inside the business to carry it out.
Are Generic Drugs Causing Inflated Prices?
Generic drug price fixing can inflate what Medicare, Medicaid and the taxpayers behind them pay when suppliers agree on prices and customers. The government’s generic-pricing cases also reached spending through TRICARE, the Department of Veterans Affairs and the Postal Service’s health plan. A deal between suppliers can affect buyers far beyond the sales account where it began.
Generic procurement happens upstream of the prescription claim. Manufacturers sell through wholesalers to dispensers, and joint buying organizations negotiate generic acquisition terms. These buying organizations join wholesalers with retail or pharmacy-benefit businesses. Their negotiations concern the acquisition of the drug before a pharmacy submits a prescription claim.
That separation matters to someone inside sales. The person negotiating the manufacturer’s sale and the person handling the eventual prescription payment see different parts of the transaction. An account decision made at the supplier can travel through the distribution business before it reaches the public program’s bill. Understanding the sale means understanding whom the manufacturer supplied and how that customer fits into the route to the dispenser.
Product-level competition is what matters here. A long list of generic manufacturers across the industry tells a buyer little about its alternatives for a particular drug. In a concentrated product market, an agreement between suppliers removes an important source of price pressure. That is why the product name and the customer relationship deserve more attention than a broad claim about expensive medicines.
Unlike drug-price reporting fraud, price fixing changes the actual transaction price through an agreement between competitors. The invoice can faithfully record the price the competitors agreed to charge.
How a Price Agreement Reaches a False Claim
The civil theory connects an arrangement between drug companies to claims paid by federal healthcare programs. In the generic-price-fixing settlements, the government treated agreements on price, supply and customer allocation as something of value exchanged to arrange drug sales. That brought pharmaceutical kickbacks into the pricing case.
A customer can be the benefit exchanged. The value sits in the sales that the arrangement protects. In these cases, the alleged kickback was part of the deal between suppliers, with the public program paying for the prescriptions that followed.
The False Claims Act reaches companies that cause false claims to be submitted. The manufacturer can make the decision upstream while a pharmacy or physician submits the claim downstream. The government’s generic-drug cases connected the supplier arrangements to public health care spending on the resulting prescriptions.
A competitor communication explains the agreement. Customer and sales records show where it operated. The government-payment records show how it reached the taxpayer. We build that account with the whistleblower, bringing our expertise to the connection between the commercial deal and the public money it affected.
Heritage Shows the Same Civil Pattern
Heritage’s settlement, announced on May 31, 2019, concerned alleged arrangements to fix generic-drug prices and allocate customers during 2012 through 2015. The parallel with Rising is the commercial exchange: competitors allegedly used arrangements over prices and customers to influence the drug business that public programs paid for.
The later civil resolutions were much larger. Sandoz, Taro and Apotex agreed to a combined $447.2 million in civil settlements announced on October 1, 2021. The government alleged pricing arrangements that caused higher federal program payments. These cases put the decisions inside sales and pricing departments at the center of the government’s loss.
Each company also entered a five-year corporate integrity agreement. The agreements required price-related reporting to the Department of Health and Human Services’ Office of Inspector General and individual certifications from key executives involved in pricing and contracting. That reaches the people responsible for setting commercial terms, the same decisions a pricing or contracting insider sees at work.
The View From Inside Pricing and Sales
A pharmaceutical whistleblower may understand a customer assignment, a pricing instruction or a competitor relationship that looks unremarkable outside the business. Sales, contracting and finance personnel can see different pieces of the same arrangement. The value of that knowledge is in explaining how the commercial decision affected actual sales and government-paid prescriptions.
An insider can explain why the company chose a price, who influenced it and which customers the company had agreed to pursue or leave alone. That is the perspective we bring together with the transaction records when assessing a generic-drug pricing case.
A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.
You Know How the Customers Were Divided
If you know how a generic-drug company chose its prices or agreed to divide customers, talk with our whistleblower experts about the arrangement you saw. We work beside you to build the case around the commercial decisions and government payments, and bring in pharmaceutical price-fixing whistleblower lawyers who understand both. From the first account of the deal through the pursuit of a recovery, we stay on your side of the table.
