AbbVie Shares Dive after California Sues Company over Alleged Kickbacks

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The shares of AbbVie (NYSE: ABBV) declined almost three percent after the California Department of Insurance (CDI) filed a lawsuit against it. The state regulator alleged the pharmaceutical company gave illegal kickbacks to health care providers for prescribing Humira.

Abbvie’s stock price closed at $92.61 per share, down from its opening price of $95.35 per share on Tuesday.

Abbvie stock price
Source: Google Finance

Abbvie violated the Insurance Frauds Prevention Act

In the lawsuit, Insurance Commissioner Dave Jones accused Abbvie of “systematically and repeatedly violated the Insurance Frauds Prevention Act.”

The pharmaceutical company allegedly “engaged in a far-reaching scheme” including giving cash, gifts, trips, patient referrals, and valuable professional goods and services as incentives to physicians for prescribing Humira.

Abbvie allegedly committed the scheme through its “Ambassadors,” a group of registered nurses who visit patients homes. These Abbvie Nurse Ambassadors provide patient care, pharmacy and insurance authorization assistance and other services. Therefore, saving physicians time, money and resources as long as they prescribe Humira to their patients.

In addition, Jones alleged that the pharmaceutical company ordered its Nurse Ambassadors to serve its financial interest by downplaying or avoiding patient’s questions regarding Humira’s serious and important side effects.

Physicians traded patient care for ill-gotten gains

Furthermore, the Insurance Commissioner alleged that “privae insurers have paid out $1.2 billion in Humira-related pharmacy claims.” It is the largest insurance fraud case in the history of CDI.

“AbbVie spent millions convincing patients and health care professionals that AbbVie Ambassadors were patient advocates—in fact, the Ambassadors were HUMIRA advocates hired to do one thing, keep patients on a dangerous drug at any cost,” said Jones.

Additionally, Jones stressed, “Pharmaceutical companies know financial inducements are illegal, and patients depend on their health care professionals for straight forward honest information about their care and medication risks. In this case, patient care was traded for $1.2 billion in ill-gotten gains.”

An Abbvie Nurse Ambassador in Florida, Lazaro Suarez reported the pharmaceutical company’s alleged misconduct to the CDI.

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