Prevacid Suit Means Pain at Abbott Unit

Abbott Laboratories is digesting some painful news about its blockbuster heartburn medication.

A high-profile whistleblower has sued TAP Pharmaceuticals, a joint venture half-owned by Abbott, for allegedly overbilling Medicaid for Prevacid -- a drug that, last quarter, generated nearly three times more revenue than Abbott's second-best-selling drug.

New Orleans physician John LaCorte, who has already won other whistleblower lawsuits, claims that TAP violated its agreement to offer Medicaid its "best price" for Prevacid by charging the agency up to 20 times more for the drug than it charged some of its other customers. LaCorte sued TAP on behalf of the federal government and is seeking triple damages, plus a $10,000 fine for each violation. He alleges fraudulent behavior that, he says, dates back more than a decade.

The government itself has so far declined to pursue the lawsuit, and TAP denies any wrongdoing. The company says it "prices its products in full compliance with federal and state laws and regulations" and that it will "vigorously" defend itself against the allegations.

Marc Vezina, the New Orleans attorney representing LaCorte, says that LaCorte will "absolutely" move forward with the case even without government help.

"My client feels very strongly about this," he says. The company must formally respond to the lawsuit in court by Oct. 1, Vezina says.

Some industry watchers believe total penalties in the case could exceed the big fine TAP has already paid for overbilling the government for its other major drug. Three years ago, TAP paid $875 million to settle allegations that it had overcharged the government for Lupron. That drug, used to treat advanced prostate cancer, last quarter generated only 25% as much revenue as Prevacid did. Although TAP agreed to pay the fine, the company maintained its innocence on many of the charges against it.

Some now view the current case as more damaging.

"I think it's safe to say this case is huge -- hundreds and hundreds of millions of dollars, without a doubt," says Patrick Burns, director of communications for Taxpayers Against Fraud. "In fact ... TAP's liability could easily be well over $1 billion."