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PAL Member Litigation
The suit alleges that during the period from 1993 through the present, Defendants created and implemented a fraudulent marketing and sales scheme to substantially increase the sale of Lupron and reap unlawful profits at the expense of Medicare patients. As part of this scheme, Defendants:
The above scheme enabled Defendants to control how much reimbursement is made under Medicare for Lupron. They deliberately marketed and promoted the sale of Lupron based on the availability of inflated payments made by Medicare and Medicare beneficiaries. Twenty percent of the inflated Medicare payments come directly from co-payments and deductibles paid by Medicare beneficiaries.
In separate criminal cases, several urologists have pled guilty to charges that they conspired with TAP to defraud Medicare and Medicare beneficiaries regarding the usage of Lupron. The federal government also brought charges against TAP, seeking to recover its portion of the fraudulent charges, which constitute 80% of the overpayments. TAP agreed to settle this case, pleading guilty and agreeing to pay $875 million. This was the largest health care fraud settlement in history.
PAL's suit seeks to recover the other 20% of the overpayments paid by individual Medicare beneficiaries.
In January 2003, the Court ruled on one defendant's (Takeda's) motion to dismiss for lack of personal jurisdiction. This motion was denied in part and granted in part. Ultimately, the case against Takeda survived the motion and will remain before Judge Stearns.
In December, 2003, almost a year since oral argument on the matter, Judge Stearns issued his ruling on Defendants' Motions to Dismiss. The ruling was a very good one for Plaintiffs. In upholding most of the claims against Defendants and allowing the litigation to proceed, Judge Stearns - in reference the Defendants' arguments that the prices published by Defendants were analogous to "sticker prices" and Defendants therefore cannot be held liable for fraud - observed that "[t]here is a difference between a 'sticker price' and a 'sucker price.'" As a result of this ruling, Plaintiffs have moved ahead with additional document discovery as well as numerous depositions of TAP, Abbott and Takeda.
Update: On November 15, 2004, the parties entered into a proposed settlement agreement. Defendants agreed to pay a total of $150 million dollars to settle this litigation. After a payment of $55 million to private health insurers who had brought suit separately against the defendants, the remaining $95 million will be made available for distribution to the class - $40 million has been allocated to satisfy consumer claims and $55 million to satisfy the claims of third-party payors. The deadline for Lupron consumers to submit claims was on May 15, 2005. The parties anticipate that the claims will be made in early 2006.
Court: U.S. District Court, District of Massachusetts (Judge Stearns)
Lupron Plaintiff Class