FOR IMMEDIATE RELEASE CIV

THURSDAY, MAY 18, 2006 (202) 514-2007

WWW.USDOJ.GOV TDD (202) 514-1888

United States Intervenes in Suit Against

Abbott Laboratories Inc.
WASHINGTON, D.C. – The United States has intervened in a whistleblower suit
filed against Abbott Laboratories Inc. (Abbott), alleging that the company violated
the False Claims Act, the Department of Justice announced today. In its complaint,
the government alleges that Abbott—a pharmaceutical manufacturer that sells brand
and generic drugs that are reimbursed by the Medicare and Medicaid programs—
engaged in a scheme to report fraudulent and inflated prices for several
pharmaceutical products, knowing that federal healthcare programs established
reimbursement rates based on those reported prices.

The government’s complaint alleges that from at least on or before January 1, 1991
Abbott’s Hospital Products Division (HPD) reported prices that were more than 10
times (1000 percent) the actual sales prices on many of the drugs it manufactures.
The United States alleges that federal healthcare programs, both Medicare and
Medicaid, have reimbursed Abbott’s customers in excess of $175 million for the
drugs which are the subject of the complaint.

The difference between the inflated government reimbursement rates and the actual
price paid by healthcare providers for a drug is referred to as the “spread.” The
larger the spread on a drug, the larger the profit or return on investment for the
provider. The United States alleges that Abbott used artificially inflated spreads to
market, promote, and sell the drugs to existing and potential customers. Because
reimbursement from federal programs was based on the fraudulent inflated prices,
the United States contends that Abbott caused false and fraudulent claims to be
submitted to federal healthcare programs.

“This complaint marks another step in the government’s investigation and

prosecution of pharmaceutical manufacturers who submit fraudulent drug pricing
information that costs the federal healthcare programs and taxpayers millions of
dollars,” said Assistant Attorney General Peter D. Keisler, of the Justice
Department's Civil Division.

“The filing of this lawsuit reflects the government’s dedication to pursuing large-
scale pharmaceutical pricing fraud cases that squander scarce resources needed to
provide for the health care needs of the poor, the elderly and the disabled,” said R.
Alexander Acosta, U.S. Attorney for the Southern District of Florida.

The investigation began after the filing of a civil False Claims Act suit by a local
home-infusion company, Ven-A-Care of the Florida Keys Inc., and its principals.
The civil False Claims Act allows for private persons to file whistleblower suits to
provide the government information about wrongdoing. Under the statute, if it is
established that a person has submitted or caused others to submit false or
fraudulent claims to the United States, the government can recover treble damages
and $5,500 to $11,000 for each false or fraudulent claim filed. If the government is
successful in resolving or litigating its claims, the whistleblower who initiated the
action can receive a share of between 15 percent to 25 percent of the amount
recovered.

The law suit, called a qui tam action, was filed in the U.S. District Court for the
Southern District of Florida and was assigned to U.S. District Court Judge Alan
Gold. This investigation was conducted by the U.S. Department of Justice, the U.S.
Attorney's Office for the Southern District of Florida, and the Office of Inspector
General of the Department of Health and Human Services.

###

06-309