Recent Drug Company Settlement Highlights Unique Theory of False Claims Act Liability: Failure to Follow Current Good Manufacturing Practices

Last month, Baxter International Inc. and Baxter Healthcare Corporation (collectively “Baxter”) settled a qui tam False Claims Act (FCA) case with the Department of Justice (DOJ) for $18 million. The settlement is not monumental in terms of the amount, but does highlight the unique theory of FCA liability. The government alleged that Baxter submitted false claims for a drug sold to the Department of Veterans Affairs and Department of Defense, as well as reimbursed by the Medicare and Medicaid programs, because the drug was “adulterated,” given Baxter’s alleged violations of the Federal Food, Drug, and Cosmetic Act’s (FDCA) current good manufacturing practice (cGMP) requirements – but not because of any impact on the drug itself.

*This alert was originally posted on Arent Fox's Health Care Counsel blog. To read this alert in its entirety, please click here.