Abbott Labs Blows Whistle on Pharmacy Fraud

BROOKLYN, N.Y. (CN) - Abbott Laboratories has taken on two dozen distributors and pharmacies in a federal complaint, accusing them of importing and selling products meant for the international market that have not been cleared for sale in the U.S.

Abbott says the scheme is costing it millions of dollars in bogus rebates for FreeStyle test strips that diabetic consumers use to monitor their blood glucose levels.

"Millions of individuals with diabetes use FreeStyle test strips on a daily basis to monitor their blood sugar and help them control their disease," the Oct. 9 complaint states.

Abbott says a host of individuals and business have conspired to divert international FreeStyle strips "that are illegal to sell in the United States."

"The defendants are passing these unapproved test strips off to unsuspecting U.S. consumers to receive insurance reimbursements that they are not entitled to," the 74-page complaint states. "In doing so, defendants have defrauded and continue to defraud Abbott, other manufacturers of test strips, and insurance companies, third-party payors, and Medicaid and Medicare."

Abbott says a series of wholesalers are "at the center of this conspiracy."

These companies imported large volumes of "diverted" test strips for pharmacies, which sell the products to unsuspecting U.S. consumers and then submit fraudulent reimbursement claims, the complaint states.

Abbott notes that it sells FreeStyle test strips outside the United States "at markedly lower list prices" because of the differences between U.S. and international insurance, reimbursement, and rebate practices.

U.S. consumers meanwhile don't see any of these savings, since the pharmacies dispense the diverted products to them "at higher U.S. retail prices for the purpose of receiving fraudulent reimbursement payments from the consumers' insurers," according to the complaint.

A U.S. consumer's prescription benefit "covers the test strips' full retail price - minus any copayment by the consumer," Abbott continues.

"The prescription benefit reimbursements then being paid by the insurance companies are significantly higher than what Defendants actually paid for the diverted international product," the complaint states. "Defendants are reaping significant profits as a result.

Abbott seeks punitive damages for federal trademark infringement, violation of federal anti-racketeering law, fraud and several other claims.

It is represented by Geoffrey Potter with Patterson Belknap Web & Tyler in Manhattan.

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