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More False Claim Act Settlements: Watson and Sandoz

Two pharmaceutical manufacturers, Watson Pharmaceuticals and Sandoz/Geneva Pharmaceuticals, have settled drug pricing lawsuits for $145 million, according to a settlement agreement filed in federal court. Watson makes generic drugs; Sandoz is owned by Novartis’ generic drug division (did you know they had one?).

By now, the allegations in these claims are commonplace. The lawsuits alleged that these drug companies charged government health care programs with inflated prices for prescription drugs. This case spun out into an MDL in the District of Massachusetts.

Both lawsuits were filed under the U.S. False Claims Act – a whistleblower statute – by Ven-A-Care of the Florida Keys Inc., a specialty pharmacy. The law allows whistle-blowers to file on behalf of the government and share in any recovery. Their lawyers are pocketing some real cash, Ven-A-Care gets some found money (between the two, $8.3 million), and the states make out well, too. The big ones bring home the real bacon: Texas will receive $29.5 million, Florida $20.2 million, and New York $79 million.

Bloomberg reports that Sandoz’s owner, Novartis, denies responsibility, in spite of forking over $66 million. The claims were “unfounded,” and Sandoz settled “to end the uncertainty of protracted litigation,” a Novartis spokesman said in an email. “Sandoz is committed to conducting business in compliance with all applicable laws and regulations, as well as our own high ethical standards.”

There is a whole whistleblower world out there that I know very little about. The False Claim Act sounds like a very modern invention, something we just came up with to put more pressure on big business to stop stealing money from the government. But the colonists were babbling about this type of law from the beginning and it was codified 100 years later while Abraham Lincoln was in office. Why the impetus, then? War profiteers were selling sick or injured horses to the Union during the Civil War. Little known fact: there were blood relatives of six executives in senior management at Novartis (Okay, I made that up. But it could be true.)

This law offends my sensibilities to the extent that clients who suffered little injury are being richly compensated. I’m a personal injury lawyer. I’m used to the injury being required for recovery. But, ultimately, are these lawsuits for the public good? Do they save us all money in the long run even if someone is, in a sense, “getting over”? Yes, and yes.