Sanofi Pasteur: The Pricing Error Reached Further Back Than the Disclosure

In the Sanofi Pasteur VA overcharge settlement, the company agreed to pay $19,868,194 to resolve alleged Federal Ceiling Price overcharges under two contracts with the Department of Veterans Affairs. Sanofi’s own disclosure covered a shorter period than the VA investigation ultimately found. If you work inside government pricing, the difference may be familiar: correcting the calculation and accounting for every purchase it affected are different jobs.

The Justice Department identified Sanofi Pasteur as the vaccines division of Sanofi-Aventis. The department announced the settlement on April 3, 2017. This government pricing case turned on the calculation that set what the VA could be charged.

The Federal Ceiling Price Starts With the Manufacturer’s Numbers

The Federal Ceiling Price limits what manufacturers can charge certain federal buyers for covered drugs. The Department of Veterans Affairs buys under a system in which the manufacturer supplies the pricing data used to establish that limit. An error in the underlying calculation can therefore change the government’s purchase price before an invoice reaches the buyer.

The VA Inspector General’s explanation of the purchasing system describes the manufacturer’s obligation to make covered drugs available through Federal Supply Schedule contracts. The VA, Department of Defense, Public Health Service and Coast Guard receive prices at least 24% below the non-Federal Average Manufacturer Price, commonly called non-FAMP.

In VA drug price reporting, manufacturers submit non-FAMP data and VA Pharmacy Benefits Management Services uses it to calculate annual ceiling prices. The commercial records sit inside the business supplying the government. The protection for the buyer depends on those records becoming an accurate reported number.

That is a distinctive part of this market. The VA is a direct federal purchaser, with contract prices tied to manufacturer reporting. The pricing analyst, the contracts team and the people maintaining sales data can each see a different part of the same purchase. Their work meets at the ceiling the government is supposed to receive.

Sanofi Pasteur’s FCP Self-Disclosure and the Longer Audit Period

Sanofi Pasteur’s FCP self-disclosure covered incorrect calculations for 2007 through 2011. The longer audit period reached back to 2002. According to the Justice Department, Sanofi disclosed that its calculations had overcharged the VA, and the VA Office of Inspector General investigated and determined that the error had affected earlier purchases too.

The start date is the point. Taxpayers paid the overcharges on drugs bought for veterans’ health care. A corrected price can answer what the government should pay going forward while leaving a separate question about purchases made under the old calculation. In Sanofi’s case, the government’s review reached beyond the period the company initially disclosed.

For an insider, that puts the history of the calculation alongside the corrected result. When did the method first appear? Which contracts used it? Did the same treatment carry into earlier pricing years? Those are the connections we examine with someone who knows the system, because the amount owed depends on which purchases the correction reaches.

The Department of Veterans Affairs’ later audit work explains why that history matters. When manufacturers restated non-FAMPs, reviewers evaluated the revised methodology, VA updated historical ceiling-price records, and contracting officers modified contracts. The Inspector General said these steps were necessary because prior-year prices could affect current prices. Fixing the latest entry alone does not account for that chain.

The Settlement Followed an Investigation, With No Lawsuit Filed

No lawsuit was filed in connection with the Sanofi Pasteur VA settlement, according to the Justice Department. The settlement covered VA overcharges under the two contracts during 2002 through 2011. Beyond the payment, Sanofi Pasteur agreed not to pursue reimbursement for sales where it contends its calculation error gave the VA a lower price. The path described by the government was a company disclosure, a VA investigation and an agreement to pay.

That sequence distinguishes this resolution within the wider pharmaceutical settlement record. The useful lesson for a pricing employee is what the review changed: the company’s account of the affected period did not set the investigation’s boundary. Earlier transactions still mattered.

Later VA Reviews Found More Than Manufacturers Disclosed

The Department of Veterans Affairs Inspector General found more overcharges than manufacturers disclosed in separate reviews completed in fiscal years 2022 and 2023. Its September 2024 report compares the amounts. Some manufacturers estimated approximately $53.3 million in overcharges in their disclosures. The Inspector General recommended collecting approximately $61.2 million after reviewing the calculations, contract coverage and price-reduction obligations.

The reviews covered more than calculation errors. Manufacturers also added covered drugs to Federal Supply Schedule contracts late, including after changes to National Drug Codes or package sizes. Other overcharges arose when manufacturers failed to lower contract prices after prices fell for the customers whose prices the contracts tracked.

The report also shows how a review can grow. One unnamed manufacturer submitted disclosures for itself and another company in which it held a majority interest. It attributed their non-FAMP problems to errors in its government pricing system. Reviewers found additional errors and expanded both reviews.

The manufacturer responded by introducing routine monitoring to ensure its non-FAMP calculations captured all relevant data. It also corrected the reported figures, and the Inspector General verified that VA updated the associated historical ceiling prices. The correction had to travel from the manufacturer’s system into the government’s pricing records.

These reviews illustrate the business problem that makes Sanofi’s chronology worth examining: a disclosure identifies what the company has found, while an independent review can uncover more.

A public settlement announcement can describe an overcharge period. Someone who worked with the calculation can explain how the data entered it, which versions were used and what changed when the company corrected it. Those details connect a pricing result to the business decisions behind it.

Different Price Reports Can Shortchange Different Programs

Federal Ceiling Price calculations use non-FAMP. Medicaid rebates use Average Manufacturer Price and Best Price. The 340B ceiling price uses Average Manufacturer Price minus the Medicaid unit rebate amount.

A separate Aventis settlement announced in May 2009 illustrates the distinction. Aventis agreed to a $95.5 million civil settlement over allegations that it left private-label discounts out of Best Price for Azmacort, Nasacort and Nasacort AQ between 1995 and 2000. The government alleged that agreements with Kaiser Permanente repackaged the drugs under a new label, allowing Aventis to avoid reporting the lower price. The alleged result was smaller Medicaid rebates and higher prices for certain Public Health Service purchasers.

The parallel is the manufacturer’s control over a reported price. Aventis’s alleged exclusion of a discount affected Medicaid rebates and public-purchaser prices. Sanofi Pasteur’s VA resolution concerned incorrectly calculated Federal Ceiling Prices.

Public Citizen’s 2018 study, Twenty-Seven Years of Pharmaceutical Industry Criminal and Civil Penalties: 1991 Through 2017, found that overcharging government healthcare programs appeared in more settlements than any other violation category in its dataset. Much of that history involved state Medicaid cases over reported average wholesale prices. The study places pricing reports at the center of a substantial enforcement history.

What Evidence Is Needed to Prove Fraud?

For a government pricing case, we examine how the underlying sales data became a reported price, how that price affected government purchases, and what the company knew about the calculation. Original calculations, corrected versions, contract histories and communications about the error connect those parts of the story.

The VA’s audit methods make the comparison concrete. Reviewers evaluated manufacturers’ non-FAMP methodology and calculations, then used Federal Supply Schedule sales data to determine overcharges on contracted purchases. We examine a price restatement against the transactions and contract prices it was meant to correct.

An employee familiar with the pricing system may understand why a category of data was included or omitted. Someone in contracts may know when the changed price reached the agreement. We work with that knowledge to connect the calculation, the affected purchases and the company’s response, including whether the correction addressed earlier periods.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. For someone who sees a government pricing problem inside another business, we assess the records and the potential case with them.

You Know Where the Calculation Changed

If you know why a government price was wrong or why a correction stopped at a particular year, talk with our whistleblower experts. We build the case around your knowledge and bring in pharmaceutical pricing whistleblower lawyers who understand federal purchasing and manufacturer reporting. We stay with you from the first call through the work of pursuing the recovery.