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Pharma giant caught over-billing Veterans Administration by almost $20M

Another major drug company has been exposed for bilking the American taxpayer out of what amounts to tens of millions of dollars in fraudulent overcharges. French pharmaceutical giant Sanofi-Pasteur was recently ordered to pay back nearly $20 million after it was revealed that the multinational had massively inflated drug costs in a contract with the Veterans Administration (VA), which provides healthcare services for the nation’s ill veterans.

According to reports, Sanofi-Pasteur, the vaccine division of Sanofi-Aventis, had incorrectly calculated the prices of drugs it sold to the VA, resulting in overcharges amounting to $19,868,194. Sanofi-Pasteur openly admitted this to the VA, prompting an investigation into the matter by the VA’s inspector general, who has since ordered the drug company to pay back the excess it had received from the government in error.

The Veterans Health Care Act is very specific about the amounts that drug companies can charge the government for drugs, which must align with and not exceed the amounts provisioned in the Federal Price Ceiling. However, Sanofi-Pasteur ignored these provisions and charged amounts that were much higher – and it had been doing so since at least as far back as 2002, according to information uncovered as part of the VA’s investigation.

“Overcharging VA depletes funds that are available to care for our veterans,” Mark Myers, Director of the Healthcare Resources Division at the VA, said in a statement. “We will continue to hold companies accountable for errors in drug pricing.”

Why didn’t VA, DOJ conduct its own investigation into Sanofi prior to the company fessing up about fraud?

Some may find it interesting that it took nearly 15 years for the VA and its partners at the Department of Justice (DOJ) to even realize that Sanofi-Pasteur had been overcharging for drugs in violation of the law, whether intentional or otherwise. Again, based on government-issued statements, this latest investigation and ordered payback of what amounts to stolen funds only took place because Sanofi-Pasteur fessed up of its own accord, which prompted an obligatory response from federal authorities.

The federal government failed, in other words, to catch the error on its own, illustrating once again that many entrusted public servants simply aren’t doing their jobs. Every contract made between the federal government and drug companies deserves much closer scrutiny, because it’s highly likely that such fraud is rampant, and not being properly addressed on behalf of American taxpayers who are ultimately having to foot the bill.

The Trump Administration has an obligation to work towards running a tighter ship at the mismanaged VA, not only in the interest of better managing public funds but also to ensure that the nation’s veterans are getting the care they need, and the care they deserve. Gross mismanagement of taxpayer funds that allows for drug companies to skim tens of millions of extra dollars beyond what they should be getting is simply unacceptable, and needs to be nipped in the bud.

At the same time, Sanofi-Pasteur deserves credit for being transparent about the overcharges, for whatever reason it suddenly decided to disclose them to authorities. Perhaps it was the thought that the Trump Administration would be more aggressive than previous administrations in catching such violations and prosecuting them that served as motivation. Whatever the case, Sanofi-Pasteur is now being held accountable, and is even going so far as to not seek reimbursement for drugs it sold to the VA at prices lower than the Federal Ceiling Price.

“It is important that pharmaceutical companies provide complete, accurate, and current information to the VA about the pricing of their drugs,” indicated Acting Assistant Attorney General Chad A. Readler in a statement, supporting this sentiment. “The Department of Justice will ensure that pharmaceutical companies follow the rules for drug pricing when selling to the government.”

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