Abbott Claims DOJ Let 12 Years' of Drug Pricing Documents Get Destroyed

(MoneyWatch)  Abbott Labs has accused the Department of Justice of failing to preserve 12 years' worth of evidence in a massive case about whether drug companies artificially inflated the price of drugs. Abbott's motion states:

DOJ kept the lawsuit under seal for more than eleven years, conducting one-sided discovery against Abbott, but did nothing to preserve evidence in its own possession or control.

Not a single litigation hold order was issued. Not a single agency was told to preserve evidence.

The case has been dragging through federal Judge Patti Saris' (pictured) Massachusetts court for years. It is unbelievably complicated, but can be summed up as follows: The DOJ alleges that many drug companies offered their drugs to doctors and hospitals at prices lower than the "Average Wholesale Price" used by Medicare and Medicaid to reimburse them. The doctors would buy the drugs from the companies at the lower rate and then be reimbursed by the government at the higher rate. This situation allegedly put docs in the position of receiving cash kickbacks for using certain drugs, and caused taxpayers to be overcharged for drugs used. AWP pricing has since been outlawed.

The crux of the case comes down to the difference between prices offered and prices paid, information which is recorded by government bodies such as Medicare and Medicaid. and Abbott is clearly livid that for more than a decade, the DOJ didn't ask those agencies to hold onto their records:

The Department of Justice ("DOJ") waited twelve years to direct anyone to preserve evidence relevant to this litigation.

Worse, government officials became cynical about the litigation and learned to destroy documents before they got to lawyers:

... a 2006 email from a New York pharmacy official to his colleagues in other states:

Jerry: NY has been involved in AWP litigation issues- (I can't say how many) through our Attorney General Office. . . . Lesson learned: get rid of any papers that are from before state record keeping requirements ?€" lawyers want everything available (note: do not get rid of anything once litigation has begun or after lawyers tell you to keep what is available ?€" you could get in a lot of trouble).

Abbott wants damages eliminated on claims where there is no data. Among the missing data are every single email from the Centers for Medicare & Medicaid Services prior to September 2005:

In September 2005, CMS changed its email program, but made no effort to retain relevant emails. The result was a massive destruction of potentially relevant emails, even as CMS purported to respond to a subpoena.

And witnesses can't remember what happened years ago without those records, Abbott claims:

CMS official Larry Reed agreed that it was "fair to say that you can't tell me one way or the other whether you knew in 1993 that state Medicaid programs were using excess payments of ingredient costs to subsidize insufficient dispensing fees," ...

• Previously:
• McKesson Pays $350 Million in Settlement That Lowers Drug Prices 4 Percent