The Roche lawsuit claims that Utah-based Alliance Medical acquired the test strips through a Roche mail order plan and then resold them at a higher price.
Roche has filed a number of multi-million lawsuits against executives of a Utah-based company that the Swiss pharma giant claims was a fraudulent scheme that involved its Accu-Chek diabetes test strips. The company claims it lost out on tens of millions of dollars in revenue from the scheme.
In the court filings, Roche said individuals and companies fraudulently obtained diabetes test strips through a mail-order program set up by the company and then turned around and sold them at higher prices through brick and mortar drugstores. According to a Reuters’ analysis of the lawsuit, Roche claimed that it was cheated out of $84 million through the fraudulent resale action.
Roche’s Accu-Chek products, which include the test strips as well as glucose monitoring devices, lead the blood glucose monitoring market.
The lawsuits target Utah-based Alliance Medical and its former chief, Jeffrey C. Smith. According to Reuters, Roche claims that between 2011 and 2017, Alliance Medical and Smith “sought fraudulent reimbursements for 1.84 million 50-count boxes of Roche diabetes test strips.” Alliance Medical filed for bankruptcy in 2017 following a raid by federal agents who were seeking evidence of healthcare fraud, Reuters said. The company’s lender planned to terminate money to support the company after the criminal complaint was filed. Zions First National Bank had loaned nearly $30 million to the company, according to a 2017 Wall Street Journal report about the bankruptcy.
The Roche complaint says that Alliance Medical and those named within the lawsuit caused the company to “wrongfully pay over $87 million in rebates and to lose a similar amount of sales of retail strips.”
The blood-test strips used by diabetes patients typically cost about $160 for a box of 100. The cost has created a “’greyer market’ away from formal retail channels that strip makers contend is vulnerable to fraud and safety concerns,” Reuters said.
The Roche lawsuit is similar to one filed by Abbott Laboratories regarding its diabetes test strips. The case, Abbott Laboratories et al., v. Adelphia Supply USA et al, is currently before the U.S. District Court for the Eastern District of New York.
Roche has been protective of its Accu-Chek product line. Earlier this year, the company filed a lawsuit against Valeritas Inc. over patent infringement. According to a Bloomberg report, the Roche complaint says Valeritas’ V-Go insulin delivery devices infringe on patents owned by the Swiss company. The patent covers Roche’s Accu-Chek insulin delivery device technology and its associated Accu-Chek products, Roche said in the complaint, according to Bloomberg.
