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Genzyme Corporation Pays $5.885 Million to Resolve False Claims Act Allegations; Judgment Involving Cases Against Nine Other Pharmaceutical Manufacturers Certified as Final Judgment, Allowing Appeal

Posted: May 5, 2017
Outcome: Settlement
Practice Areas: Whistleblowers, Qui Tam & False Claims Act

Philadelphia, PA, May 5, 2017. Berger & Montague, P.C., joins co-counsel Faruqi & Faruqi, LLP in settling a whistleblower lawsuit against pharmaceutical manufacturer Genzyme Corporation for a total of $5.885 million.  This is the last in a series of four previously declined cases which Berger & Montague and Faruqi & Faruqi have successfully settled for a total of over $60 million dollars.

Mr. Streck brought suit in 2008 under the Federal False Claims Act ("FCA") and various State False Claims Acts.  The lawsuit alleged that Genzyme treated millions of dollars in payments to wholesalers as "discounts," when in fact the payments were for bona fide services rendered. By treating the payments as discounts, the manufacturers reported lower average manufacturer prices, which consequently led them to pay less in rebates to state Medicaid programs. Mr. Streck's suit was the first of its kind, in that the alleged fraud scheme had never been revealed in any prior lawsuit or government enforcement operation.

The government declined to intervene in 2011, so Mr. Streck and his counsel, Berger & Montague and Faruqi & Faruqi, litigated the case until settlement was reached.

Despite the settlement, Mr. Streck's pursuit of alleged fraud is not over.  Mr. Streck's lawsuit alleged that a second category of defendants - specifically, nine pharmaceutical manufacturers - defrauded state Medicaid through a different scheme which also involved payments to wholesalers.  Yesterday, Judge Eduardo Robreno certified the final judgment against these defendants, thus paving the way for an appeal to the Third Circuit.  Those defendants include Allergan, Inc., Amgen, Inc., Bradley Pharmaceuticals, Inc., Eisai, Inc., Mallincrodt, Inc., Novo Nordisk, Inc., Reliant Pharmaceuticals, Inc., Sepracor, Inc., and Upsher-Smith Laboratories, Inc.

The settlement with Genzyme marked the seventh previously-declined case in the past two years that Berger & Montague has successfully litigated on behalf of the federal and state governments. Dan Miller, lead counsel in the case against Genzyme and the co-chair of Berger & Montague's Qui Tam Practice Group, explained the changing landscape of FCA litigation: "Years ago, if the government declined a False Claims Act case brought by a whistleblower, the case would typically get dismissed.  But more recently, complex commercial litigation law firms like Berger & Montague have successfully litigated declined cases against many of the nation's largest companies. The results for the taxpayers speak for themselves." Berger & Montague shareholder Joy Clairmont, also an integral part of Mr. Streck's legal team, continued: "Our client's cases show that a single individual that steps forward as a whistleblower really can make a difference.  Mr. Streck has, literally, helped changed the drug pricing practices of an entire industry."

The case is captioned U.S. ex rel. Ronald Streck v. Genzyme Corporation, et al., C.A. No. 08-5135.