Roche has filed several lawsuits in U.S. federal court in which it alleges individuals and companies obtained low-priced diabetes test strips meant for mail-order customers, only to re-direct them for sale via pharmacies where higher prices allowed them to profit from the difference. “Defendants caused Roche to wrongfully pay over $87 million in rebates and to lose a similar amount of sales of retail strips,” according to Roche’s complaint filed in U.S. District Court in New Jersey on Tuesday against more than a dozen defendants including Jeffrey C. Smith, chief executive at Utah’s Alliance Medical Holdings until 2017. In Utah, where Alliance Medical filed for bankruptcy protection in 2017 after a raid by federal agents seeking evidence of potential healthcare fraud, Roche contends Smith and others from 2011 to 2017 sought fraudulent reimbursements for 1.84 million 50-count boxes of Roche diabetes test strips. Smith did not immediately return phone calls and e-mails seeking comment. For America’s 30 million people with Type 1 and Type 2 diabetes and prick their fingers daily, blood glucose test strips help keep their glucose levels in check, preventing blindness, heart disease or death. These plastic strips are costly, running to $160 for boxes of 100 and creating incentives for a “grey market” away from formal retail channels that strip makers contend is vulnerable to fraud and safety concerns. In a separate U.S. lawsuit in Michigan, Roche alleges executives at another medical supply companies used a similar test-strip flipping scheme to cheat it out of $84 million. (This story has been refiled to switch order of third, fourth paragraphs to provide full first reference to defendant)
Roche sues U.S. executives in fight over diabetes test strips.