The U.S. Court of Appeals for the Ninth Circuit on Tuesday revived a False Claims Act lawsuit alleging that AbbVie and AstraZeneca overcharged Medicaid, Medicare, and other federal programs by more than $1.5 billion for drugs including Humira and Symbicort.
The whistleblower complaint, originally filed in 2021 by a former pharmaceutical pricing analyst, claims the companies manipulated the Average Manufacturer Price (AMP) calculations used to determine rebates owed to state Medicaid programs. Specifically, the lawsuit alleges that both companies excluded certain discounts and rebates from their AMP reports, resulting in artificially high drug prices paid by public programs.
A lower court had dismissed the case, ruling that the plaintiffs had not sufficiently alleged fraud with particularity. The Ninth Circuit reversed, finding that 'detailed allegations of systematic exclusion of discounts' met the pleading standard.
Potential damages could exceed $4.5 billion
Under the False Claims Act, defendants face treble damages plus penalties of up to $25,000 per false claim. If the whistleblower prevails, the government could recover more than $4.5 billion. The whistleblower would be entitled to 15-25% of the recovery.
AbbVie and AstraZeneca both denied the allegations. 'Our pricing practices are fully compliant with all applicable laws and regulations,' an AbbVie spokesperson said. AstraZeneca stated that it 'looks forward to demonstrating the lack of merit in these claims.'
This ruling is a major victory for transparency in drug pricing. Public programs should not be overcharged by billions while drug companies hide behind complex reporting rules.
The case will now return to district court for discovery and potential trial. The Department of Justice has not yet decided whether to intervene, but the Ninth Circuit's ruling may increase the likelihood of government participation.
