The Medicare Rebate Program ensures that Medicare and Medicaid programs benefit from the lowest prices that a manufacturer offers to any customer, i.e. they get the “Best Price.” Under the Medicare Rebate Program, a pharmaceutical company must look back every quarter and account for any special discounts given to customers and, if the government did not get the Best Price that quarter, the company must provide a rebate. Unfortunately, this incentivizes manufacturers to falsify their Best Price in order to reduce rebates to government healthcare programs. This can be take the form of simply failing to report an especially low price, to actively disguising the price paid by hiding discounts or mischaracterizing subsidies as educational grants, among other things.
The following case (not one of ours) is instructive: United States ex rel. Steinke v. Merck & Co. Inc., 432 F.Supp.2d 1082 (D. Nev. 2006), in which the Relator alleged a misreporting of Best Price by the manipulation of the “nominal drug” price as well as the unreported donation of free goods. Merck settled the case with the Department of Justice for $650,000,000.