Direct Resource Inc. has agreed to pay the government $450,000 to resolve allegations that the company falsely claimed payment in violation of the Trade Agreements Act (TAA), which prohibits the sale of products to federal agencies from countries that do not have a reciprocal trade agreement with the United States, the Justice Department announced today. The Columbus, Ohio, company allegedly knowingly sold products from China, a country that does not have such an agreement with the United States.

Direct Resource sells a variety of products to U.S. agencies, including office supplies. The General Services Administration (GSA) contracts at issue require that all products sold to the U.S. government be manufactured in one of a list of designated countries deemed to trade fairly with the United States.

The government announced that the whistleblower will receive $67,500 of the total (a relator’s share of 15%).

Global Health Care Company Abbott Laboratories Inc. has pleaded guilty and agreed to pay $1.5 billion to resolve its criminal and civil liability arising from the company’s unlawful promotion of the prescription drug Depakote for uses not approved as safe and effective by the Food and Drug Administration (FDA), the Justice Department announced today. The resolution – the second largest payment by a drug company – includes a criminal fine and forfeiture totaling $700 million and civil settlements with the federal government and the states totaling $800 million. Abbott also will be subject to court-supervised probation and reporting obligations for Abbott’s CEO and Board of Directors.

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The FDA is responsible for approving drugs as safe and effective for specified uses. Under the Food, Drug and Cosmetic Act (FDCA), a company in its application to the FDA must specify each intended use of a drug. A company’s promotional activities must be limited to only the intended uses that FDA approved. In fact, promotion by the manufacturer for other uses – known as “off-label” uses – renders the product misbranded.

Abbott has pleaded guilty to misbranding Depakote by promoting the drug to control agitation and aggression in elderly dementia patients and to treat schizophrenia when neither of these uses was FDA approved. In an agreed statement of facts filed in the criminal action, Abbott admits that from 1998 through 2006, the company maintained a specialized sales force trained to market Depakote in nursing homes for the control of agitation and aggression in elderly dementia patients, despite the absence of credible scientific evidence that Depakote was safe and effective for that use. In addition, from 2001 through 2006, the company marketed Depakote in combination with atypical antipsychotic drugs to treat schizophrenia, even after its clinical trials failed to demonstrate that adding Depakote was any more effective than an atypical antipsychotic alone for that use.

Illegal Promotion of Depakote to Control Agitation and Aggression in Dementia Patients
The FDA approved Depakote for only three uses: epileptic seizures, bipolar mania and the prevention of migraines. The FDA never approved the drug as safe and effective for the off-label use of controlling behavioral disturbances in dementia patients. In 1999, Abbott was forced to discontinue a clinical trial of Depakote in the treatment of dementia due to an increased incidence of adverse events, including somnolence, dehydration and anorexia experienced by the elderly study participants administered Depakote.

Abbott trained its sales force to promote Depakote to health care providers and employees of nursing homes as advantageous over antipsychotic drugs for controlling agitation and aggression in elderly dementia patients because Depakote was not subject to certain provisions of the Omnibus Budget Reconciliation Act of 1987 (OBRA) and its implementing regulations designed to prevent the use of unnecessary medications in nursing homes. Exploiting the fact that certain OBRA provisions did not yet apply to Depakote, Abbott sales representatives stated that by using Depakote, nursing homes could avoid the administrative burdens and costs of complying with OBRA.

Abbott’s off-label promotion of Depakote was multifaceted. The company entered into contracts that provided long-term care pharmacy providers with payments of rebates based on increases in the use of Depakote in nursing homes serviced by the providers. In addition to using its sales force to promote the drug to health care providers and employees of nursing homes, Abbott created programs and materials to train the pharmacy providers’ consultant pharmacists about the off-label use of Depakote to encourage them to recommend the drug for this unapproved use. Under these contracts, Abbott paid millions of dollars in rebates to the pharmacy providers.

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Illegal Off-Label Promotion of Depakote for Schizophrenia
In the agreed statement of facts, Abbott also admitted that from 2001 through 2006, the Company misbranded Depakote by marketing the drug to treat schizophrenia. Abbott funded two studies of the use of Depakote to treat schizophrenia, and both failed to meet the main goals established for the study. When the second study failed to show a statistically significant treatment difference between antipsychotic drugs used in combination with Depakote and antipsychotic drugs alone, Abbott waited nearly two years to notify its own sales force about the study results and another two years to publish those results. During this time, Abbott continued to promote Depakote off-label to treat schizophrenia.

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Criminal Plea
Today’s global resolution has criminal, civil and administrative components. First, Abbott has pleaded guilty to a criminal misdemeanor for misbranding Depakote in violation of the FDCA. Under the plea agreement, Abbott will pay a criminal fine of $500 million, forfeit assets of $198.5 million, and submit to a term of probation for five years. In addition, Abbott will also pay $1.5 million to the Virginia Medicaid Fraud Control Unit. As a condition of probation, Abbott will report any probable FDCA violations to the probation office, its CEO will certify compliance with this reporting requirement, and its board will report annually on the effectiveness of the company’s compliance program. In addition, Abbott agrees that during the term of probation, the company will not compensate sales representatives for off-label sales, will ensure that continuing medical education grant-making decisions are not controlled by sales and marketing, will require that letters communicating medical information to healthcare providers be accurate and unbiased, and will have policies designed to ensure that clinical trials are approved by the company’s medical or scientific organizations and published in a consistent and transparent manner. Abbott’s guilty plea and sentence are not final until accepted by the U.S. District Court for the Western District of Virginia.

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Civil Settlement
Under the civil settlement, Abbott has agreed to pay $800 million to the federal government ($560,851,357) and the states ($239,148,643) that opt to participate in the agreement to resolve claims that its unlawful marketing and illegal remuneration practices caused false claims to be submitted to government health care programs such as Medicare, Medicaid, TRICARE and to the Federal Employees Health Benefit Program, the Department of Veterans’ Affairs and the Department of Labor’s Office of Workers’ Compensation Programs.

The civil settlement addresses broader allegations by the United States that from 1998 through 2008, Abbott unlawfully promoted Depakote for unapproved uses, including behavioral disturbances in dementia patients, psychiatric conditions in children and adolescents, schizophrenia, depression, anxiety, conduct disorders, obsessive-compulsive disorder, post-traumatic stress disorder, alcohol and drug withdrawal, attention deficit disorder and autism. . Some of these unapproved uses were not medically accepted indications for which the United States and state Medicaid programs provided coverage for Depakote. The United States contends that this promotion included, in part, making false and misleading statements about the safety, efficacy, dosing and cost-effectiveness of Depakote for some of these unapproved uses, and claiming use of Depakote to control behavioral disturbances in dementia patients would help nursing homes avoid the administrative burdens and costs of complying with OBRA regulatory restrictions applicable to antipsychotics.

The civil settlement also covers allegations that Abbott offered and paid illegal remuneration to health care professionals and long term care pharmacy providers to induce them to promote and/or prescribe Depakote and to improperly and unduly influence the content of company sponsored Continuing Medical Education programs, in violation of the Federal Anti-Kickback Statute. The claims settled by the civil agreement are allegations only and there has been no determination of liability, except to the extent that Abbott has admitted facts in the civil settlement agreement or in the criminal plea and agreed statement of facts filed in the criminal action.

The civil settlement resolves four lawsuits pending in federal court in the Western District of Virginia under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery. As part of today’s resolution, the whistleblowers will receive $84 million from the federal share of the settlement amount.

Corporate Integrity Agreement
In addition to the criminal and civil resolutions, Abbott has also executed a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services, Office of Inspector General (HHS-OIG). The five-year CIA requires, among other things, that Abbott’s board of directors review the effectiveness of the company’s compliance program, that high-level executives certify to compliance, that Abbott maintain standardized risk assessment and mitigation processes, and that the company post on its website information about payments to doctors. Abbott is subject to exclusion from federal health care programs, including Medicare and Medicaid, for a material breach of the CIA and subject to monetary penalties for less significant breaches.

As the company’s press release notes, earlier this year it had announced that it would subdivide Abbott Laboratories into two new companies: one to be called Abbott (a “a diversified medical products company”), and that other (”a research-based pharmaceutical company”) to be named AbbVie. AbbVie will bear the compliance and certification obligations after the split.

Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius announced today that a nationwide takedown by Medicare Fraud Strike Force operations in seven cities has resulted in charges against 107 individuals, including doctors, nurses and other licensed medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $452 million in false billing.

Attorney General Holder and Secretary Sebelius were joined in the announcement by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, FBI Deputy Director Sean Joyce, Deputy Inspector General for Investigations Gary Cantrell of the HHS Office of Inspector General (HHS-OIG) and Dr. Peter Budetti, Deputy Administrator for Program Integrity of the Centers for Medicare and Medicaid Services (CMS).

This coordinated takedown involved the highest amount of false Medicare billings in a single takedown in strike force history.

HHS also suspended or took other administrative action against 52 providers following a data-driven analysis and credible allegations of fraud. The new health care law, the Affordable Care Act, significantly increased HHS’s ability to suspend payments until an investigation is complete.

The joint Department of Justice and HHS Medicare Fraud Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques. More than 500 law enforcement agents from the FBI, HHS-Office of Inspector General (HHS-OIG), multiple Medicaid Fraud Control Units, and other state and local law enforcement agencies participated in the takedown. In addition to making arrests, agents also executed 20 search warrants in connection with ongoing strike force investigations.

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The defendants charged are accused of various health care fraud-related crimes, including conspiracy to commit health care fraud, health care fraud, violations of the anti-kickback statutes and money laundering. The charges are based on a variety of alleged fraud schemes involving various medical treatments and services such as home health care, mental health services, psychotherapy, physical and occupational therapy, durable medical equipment (DME) and ambulance services.

According to court documents, the defendants allegedly participated in schemes to submit claims to Medicare for treatments that were medically unnecessary and oftentimes never provided. In many cases, court documents allege that patient recruiters, Medicare beneficiaries and other co-conspirators were paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could submit fraudulent billing to Medicare for services that were medically unnecessary or never provided. Collectively, the doctors, nurses, licensed medical professionals, health care company owners and others charged are accused of conspiring to submit a total of approximately $452 million in fraudulent billing.

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In Miami, a total of 59 defendants, including three nurses and two therapists, were charged today and yesterday for their participation in various fraud schemes involving a total of $137 million in false billings for home health care, mental health services, occupational and physical therapy, DME and HIV infusion. Two of these 59 defendants were originally charged in April 2012 but were indicted on additional charges today. In one case, 10 defendants were charged for participating in a fraud scheme at Health Care Solutions Network, which led to approximately $63 million in fraudulent billing for community mental health center (CMHC) services. Court documents allege that therapists at Health Care Solutions Network were instructed to alter notes and other medical documents to justify CMHC services for beneficiaries who did not need the services.

Seven individuals were charged today in Baton Rouge, La., for participating in a fraud scheme involving $225 million in false claims for CMHC services. The case represents the largest CMHC-related scheme ever prosecuted by the Medicare Fraud Strike Force. According to court documents, the defendants recruited beneficiaries from nursing homes and homeless shelters, some of whom were drug addicted or mentally ill, and provided them with no services or medically inappropriate services.

In Houston, nine individuals, including one doctor and one nurse, were charged today with fraud schemes involving a total of $16.4 million in false billings for home health care and ambulance services. According to court documents, the owners and operators of four different ambulance companies billed Medicare for ambulance rides that were medically unnecessary.

Eight defendants, including two doctors, were charged in Los Angeles for their roles in schemes to defraud Medicare of approximately $14 million. In one case, two individuals allegedly billed Medicare for more than $8 million in fraudulent billing for DME.

In Detroit, 22 defendants, including four licensed social workers, were charged for their roles in fraud schemes involving approximately $58 million in false claims for medically unnecessary services, including home health, psychotherapy and infusion therapy.

In Tampa, Fla., a pharmacist was charged with illegal diversion of controlled substances. One defendant was charged last week in Chicago for his alleged role in a scheme to submit approximately $1 million in false billing to Medicare for psychotherapy services.

The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.

Since their inception in March 2007, strike force operations in nine locations have charged more than 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 billion.

The House then resumed the consideration of the report of the Select Committee on Government contracts. Mr. ROSCOE CONKLING, of New-York, (Rep.,) said he voted against raising this Committee. It seemed none could be so honest or eminent that it would be suitable to clothe them with the unheard-of power asked on that occasion. It seemed unfit to constitute an advisory board to supervise questions of integrity relating to every man engaged in the administration of departmental affairs. It seemed to him a roving commission to take into consideration the honesty or fraud of all future contracts to be entered into with any department of the Government. It brought with it grave objections, and little argument could be found in its favor. Experience had demonstrated that every objection then made had been abundantly sustained by the conduct of the Committee, which had done grave and irreparable injustice, both to individuals and classes. These as well as the nation have suffered by the declarations of the Committee. As this Committee was a pioneer experiment, and had turned out badly, they could dispense with it. The gentleman (DAWES) had said there was indubitable evidence of fraud well nigh, in a single year, as much as the current expenditures of the Government during the Administration, which the people hurled from power because of its corruption. Now he (CONKLING) remarked that if any man was warranted in making that statement, it would justify the people in resorting to anything but revolution to redress the wrong. The poisoned arrows, feathered by the frankingprivilege, were shot far and wide among the loyal States of the Republic. Like other remarks and statements the gentleman (DAWES) made, however deliberately prepared, this was one on mature reflection he would be willing to recall. The Committee had proceeded on exparte testimony in secret. Parties never were informed they were to be tried and convicted and stigmatized, and hung up to festering infamy, and, as a case in point, he said the Committee had privily and clandestinely gathered evidence against Gen. FREMONT to blast his character as a citizen and soldier, at the time when he was in command of an army. They never informed Gen. FREMONT that he was aspersed, nor gave him the names of the witnesses against him, and they afforded him no opportunity for defence. What good, Mr. CONKLING asked, had the Committee done to offset the harm? He was not aware that one single fraud had been developed by the Committee which remained unearthed at the time they pretended to dig it up. Mr. CONKLING asked the Speaker what time remained to him. The Speaker replied eighteen minutes. Mr. DAWES, of Massachusetts, (Rep.) — The time will be extended to the gentleman. Mr. WASHBURNE, of Illinois, (Rep.) — I object to that. Mr. CONKLING — I knew that, and do you know how I knew it? Because the member from Illinois is the only man in this House surly enough to interpose objections in such a case. Mr. WASHBURNE rose to reply, when Mr. CONKLING called the member to order. Mr. WASHBURNE (excitedly) — I call the creature to order. The Speaker demanded the preservation of order. Mr. CONKLING — The member from Illinois understands the rules of this House, and must understand that this is not the place for personal altercation. He knows the proper place for that is outside these walls. Mr. WASHBURNE (excitedly) — Yes, Sir, and I am ready for it. Mr. CONKLING — No individual in this House better knows than the member from Illinois that I stand by what I say until convinced that I am in error; and therefore there is no necessity for any interruption here. Mr. CONKLING, in the course of his remarks, said he regarded the Committee as one of those ornaments too expensive under the circumstances to be indulged, and in this connection humorously commented on the allowance to the Committee by their own order, of twenty cents a mile for traveling, and two dollars a day, besides other necessary expenses. He was unaware that any other Committee had thus provided for themselves. If this Committee have been engaged in assailing men and blackening their characters, it was proper to know how much it cost. As a fine point was being put on things, it behooved them all to know whether any persons round the board had been getting anything they ought not to have. A little mileage was a dangerous thing. Like liquor, if it was tasted too much, the habit gets fastened. Mr. WASHBURNE, in reply, said it was the “unkindest out of all,” when the Chairman (Mr. STEVENS) of the Committee of Ways and Means, the leader of the House, and holding the purse-strings of the nation, recently rose in the House, and attacked the Committee in their absence, charging that they had committed more frauds than they had detected. The Committee had been notified that they should feel the biting sarcasm and blistering invective; and to-day they had listened to what might be called a pitiful imitation from the extraordinary member (Mr. CONKLING from New-York, who had attacked the Committee for the benefit of thieves, contractors, and plunderers, who had been for two weeks holding high carnival, in anticipation that the Committee were to be destroyed. It would have been but fair to give the Committee notice of the contemplated annihilation, that they might be prepared to die with decency. Why did not the member from New-York make his charges like a man and not like a skulking coward? The member undertook to criticise the expenses of the Committee, which he had figured up, and sneaked into the Clerk’s office to ask how much the members had been paid. If the member had known anything he must have known his statement was false. There was no Committee ever engaged in investigations and traveling abroad but what had been paid their proper expenses. The Committee had neglected everything to discharge the responsible trust reposed in them by the House. Now a clamor was raised to disband the Committee. If the House believes the charges made are true it would be unjust to itself and to the country if it did not disband the Committee before the adjournment to-day, and place on the brows of the members thereof the brand of dishonor. If the Committee had failed to discharge their duty, and are obnoxious to the charges made he, (WASHBURNE) called on the House not to postpone their action, but disband the Committee at once. The Committee and the country would accept that as a tribute to its faithful performance of its duty, which had led to to the attack by the member from New-York, and by every plunderer, thief, and robber, who had broken into the Treasury. While the Committee were engaged in their examinations, he found, by an official document, the member from New-York besieging the door of the Secretary of War to get contrabands for his constituents. Truly, the member was a pretty man to come here and lecture the Committee as to what the Committee had done. In further reply, he said, the history of the Department will show, that in St. Louis alone, nearly two millions of dollars had been saved by the investigations of the Committee. He had been told by Mr. HOLT, that if Congress and the Government would sustain him, nearly eight millions more would be saved by the Commission on Ordnance Contracts, now in session here, which was appointed on the evidence taken and the recommendation of this Committee. Twelve millions of dollars had been saved by the Committee, or as much as it cost JOHN QUINCY ADAMS to carry on the Government for one year. Notwithstanding these things, the Committee were held up here as wasting the public money. He repeated the Committee knew they would be met; they knew whose paths they had crossed; they knew who were the aiders and abettors of the plunderers in and out of this House; they did not like the Committee, of course not, for “No rogue e’er felt the halter draw, With Good opinion of the law.” This Committee were created by a Republican House, and appointed by a Republican Speaker, and had performed their duty without fear, favor or affection, and in their report had “nothing extenuated or set down aught in malice.” To be sure, they had exposed robbers and plunderers. Were they for this to be condemned? He again referred to Mr. STEVENS, saying the latter, after reporting a tax bill, which was large enough to fill a wheelbarrow, stepped in to attack the Committee. Gentlemen had been earnest in defending Gen. FREMONT, and in this had exhibited extreme sensitiveness, but when anything was said about another General, they were not quite so sensitive. He would leave all the Generals unmolested in the field, but after their services were dispensed with, he would try the cause, and would be ready to defend the Committee against all clamors. Then he would say: “Come on, Macduff, And damned be he who first cries — Hold, enough” Mr. WASHBURNE, in further reply, referred to ZACHI, and other subjects heretofore discussed. He said, toward the conclusion of his remarks, after the infamous attack and abuse of the member from New-York, the latter could not expect to go unscathed. He would permit no one to impugn or challenge his conduct on this floor or of this floor. He called upon the Republican party to rise up in this House and stop these enormous frauds, by every means in their power, else they would not be held guiltless by the country. Mr. HOLMAN, of Indiana, (Rep..) as a member of the Select Committee, briefly referred to the belligerents in this debate, and after declaring his coolness and dispassionateness, proceeded to vindicate the report, especially as to what it says about the transactions of ALEXANDER CUMMINGS, of whom he spoke as the protege of Mr. CAMERON, and who had been put forward to shield his principal. As to the purchase of horses, not one-fourth of those purchased in Pennsylvania and Louisville were serviceable. There was in this no evidence of fidelity to public interest. Mr. MOORHEAD, of Pennsylvania, (Rep.,) protested against such sweeping denunciations. If any person were guilty, let them be exposed, and he would go as far as any one for punishing them. If such charges continue to be indulged, honest contractors would be driven out, and business fall into the hands of scoundrels. Thus the Committee were destroying the very interests we are trying to build up. Mr. HOLMAN referred to Mr. CAMERON’s patronage to the Pennsylvania Central Railroad, which was enormous, as exhibited by the figures. The employment of Mr. CUMMINGS, in connection with transportation,showed that Mr. CAMERON was willing to advance the interests of his own family at the sacrifice of the public good. Mr. MOORHEAD inquired if Mr. CUMMINGS was a member of Mr. CAMERON’s family? Mr. HOLMAN replied that the World newspaper, of which Mr. CUMMINGS was manager, was the most noisy in supporting Mr. CAMERON’s transactions. On the subject of arms, Mr. CAMERON had made contracts amounting to $30,000,000, and on which the profits would have been $7,500,000 over and above the legitimate profits; yet Mr. CAMERON had denied ever making a contract. Against these abuses Gen. RIPLEY had stood up like a Roman — like a breakwater against the tide of corruption. Mr. MOORHEAD said on the 22d of June, less than one month before the battle of Bull Run, Gen. RIPLEY, in the belief that the arms would not be wanted, that there could not be much of a war, disposed of 10 000 rifled muskets, as good as any in the world, to Mr. COLT, in exchange for pistols. Mr. CAMERON directed them to be bought back at the price paid for them. Mr. HOLMAN asked whether the gentleman did not know that Mr. CAMERON made contracts for $30,000,000 worth of arms to mere stock brokers and speculators. In conclusion, he censured the Secretary of the Navy in the matter of purchasing vessels, and referred to other matters discussed in the report of the Select Committee. Mr. DAWES trusted the House, forgetting the personalities indulged in to-day, would return to the direct issue before them. It was said the exposures made by the Committee had brought the nation into disgrace abroad, but this was not the fault of the Committee. Should they have covered up the sore or laid it open, and probed it to the bottom? When abuses ceased to be exposed, then might properly be lamented the absence of honesty and public virtue. It should not be expected that they would be a whitewashing Committee. As a grand inquest, they could only bring the facts before the House for their action. He remarked with pleasure that the Secretary of the Treasury had cooperated with the Committee to the fullest extent, in reforming abuses. Mr. OLIN, of New-York, (Rep.,) defended Gen. RIPLEY as a man of untiring devotion, honesty and patriotic zeal. Mr. FENTON, of New-York, (Rep.,) in replying to the former remarks of Mr. STEVENS, said, in the investigations of the Committee in New-York, Harrisburgh and Washington, they did not fail to furnish the accused parties with the evidence, or offer theman opportunity of being heard in explanation. He did not accompany the Committee to the West, and had dissented from their conclusions as to that Military Department. He moved the previous question on the pending resolution of the Committee. Mr. STEVENS moved to lay the whole subject on the table, pending which the House adjourned.

McKesson Corporation has agreed to pay the United States more than $190 million to resolve claims that it violated the False Claims Act by reporting inflated pricing information for a large number of prescription drugs, causing Medicaid to overpay for those drugs.

Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division; New Jersey U.S. Attorney Paul J. Fishman; and Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services announced the settlement today.

The government alleges that McKesson, a large drug wholesaler, reported the inflated pricing data to First DataBank (FDB), a publisher of drug prices that are used by most state Medicaid programs to set payment rates for pharmaceuticals.

The Medicaid program is funded jointly by the federal and state governments. This settlement resolves claims based on the federal share of Medicaid overpayments caused by McKesson’s conduct. In addition to the $190 million – which represents the $187 million settlement and interest – state governments can separately negotiate with McKesson to resolve claims based on the states’ shares of the Medicaid overpayments.

The drug pricing data at issue here relates to the “Average Wholesale Price” (AWP) benchmark used by Medicaid and other programs to set payment rates for pharmaceuticals. The settlement announced today is based on the United States’ allegations that McKesson reported inflated mark-up percentages to FDB for a wide variety of brand name drugs, causing FDB to publish inflated AWPs for those drugs.

To date, federal and state governments have recovered more than $2 billion from drug manufacturers that were alleged to have reported inflated AWP information to FDB and other publishers of drug prices.

The case apparently began as a government investigation, and not a whistleblower suit.

The United States has intervened in a lawsuit against Japanese company, Toyo Ink Manufacturing Co. Ltd. and its U.S. subsidiaries: Toyo Ink International Corp., located in New York; Toyo Ink America LLC, located in Illinois; and Toyo Ink Manufacturing America LLC, located in New Jersey, the Justice Department announced today. Toyo Ink, which has operations worldwide, is a leading provider of printing inks.

The suit alleges that the Toyo Ink companies knowingly misrepresented the country of origin on documents presented to U.S. Customs and Border Protection to avoid paying antidumping and countervailing duties on imports of the colorant carbazole violet pigment number 23 (CVP-23). The Department of Commerce assesses antidumping and countervailing duties, which are collected by U.S. Customs, to protect U.S. businesses by offsetting unfair foreign pricing and government subsidies. Imports of CVP-23 from China and India have been subject to these duties since 2004.

The suit alleges that Toyo misrepresented Japan and Mexico as the countries of origin for its CVP-23 imports to avoid these duties. Although Toyo’s CVP-23 imports from China and India underwent a finishing process in Japan and Mexico, the complaint alleges that this process was insufficient to change the country of origin.

Comment: It will be interesting to see how the Court rules on the application of the False Claims Act in this case. Other courts have split on whether the avoidance of a customs obligation can provide the grounds for a reverse false claim allegation under the Act.