Watson, Sandoz Pay $145 Million to Settle Drug-Price Case

Watson Pharmaceuticals Inc. (WPI), the generic-drug maker, will pay $79 million and Novartis AG (NOVN)’s Sandoz unit will pay $66 million to resolve claims they defrauded U.S. and state governments by causing Medicaid to overpay for drugs.

Both lawsuits were filed under the U.S. False Claims Act by Ven-A-Care of the Florida Keys Inc., a specialty pharmacy. The settlements resolved portions of the U.S. false claims cases and similar claims by various states. The law allows whistle-blowers to file on behalf of the government and share in any recovery.

Ven-A-Care has settled at least 18 lawsuits since 2000 that have allowed state and federal governments to collect at least $2.2 billion. Ven-A-Care has reaped more than $380 million in whistle-blower fees during that period. James Breen, an attorney for Ven-A-Care, declined to comment.

The settlements by Watson and Sandoz were filed yesterday in federal court in Boston, where U.S. District Judge Patti Saris is overseeing the so-called Average Wholesale Price litigation against drugmakers.

Charlie Mayr, a spokesman for Parsippany, New Jersey-based Watson, declined to comment. He referred to the company’s last annual report, filed in February, that said the company had reached a settlement with Ven-A-Care for $79 million in December.

The claims were “unfounded,” and Sandoz settled “to end the uncertainty of protracted litigation,” Eric Althoff, a spokesman for Basel, Switzerland-based Novartis, said in an e- mail. “Sandoz is committed to conducting business in compliance with all applicable laws and regulations, as well as our own high ethical standards,” he said.

The case is In Re Pharmaceutical Industry Average Wholesale Price Litigation, MDL No. 1456, U.S. District Court, District of Massachusetts.

To contact the reporters on this story: David Voreacos in Newark at dvoreacos@bloomberg.net; Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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