Danco Laboratories, LLC (“Danco”) will pay $765,000 to resolve Justice Department allegations that it violated the False Claims Act by failing to pay certain customs duties, known as marking duties, on imported pharmaceutical products that lacked markings to identify their country of origin. The Danco prosecution and settlement remind pharmaceutical and other product importers of the importance and ensuring their compliance with product marking, duty and other customs mandates.
The Tariff Act of 1930 requires companies that import foreign products into the United States to mark the country of origin on those products. Importers failing to mark their products are subject to a 10% ad valorem duty.
A settlement announced by the Justice Department on April 12 resolves allegations that Danco failed to mark its sole imported pharmaceutical product, Mifeprex, with the appropriate country of origin, and thereafter violated the False Claims Act by knowingly avoiding the marking duties owed from 2011 through 2019.
The civil settlement includes the resolution of claims brought by the Life Legal Defense Foundation under the qui tam or whistleblower provisions of the False Claims in U.S. ex rel. Life Legal Defense Foundation v. ASD Specialty Healthcare, LLC, et al., No. 21-cv-0088 (E.D. Tex.). The False Claims Act qui tam provisions allow a private party, known as a relator, to file an action on behalf of the United States and receive a portion of any recovery. As part of today’s resolution, the whistleblowers will receive approximately $115,000.
In announcing the settlement, Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division is quoted as saying, “This settlement demonstrates the department’s commitment to ensure that importers properly pay all amounts due under our customs laws.”
“The United States has required imported goods to be marked with their country of origin for generations, so American consumers can use that information in their purchasing decisions,” said Director Frank Russo of the U.S. Customs and Broder Protection (CPB) New York Field Office. “CBP takes the marking laws very seriously, and is pleased to work with our partners to ensure importers adhere to all customs laws.”
Customs marking and duties are only a few of the multitude of additional issues pharmaceutical and other importers must handle in addition to the usual obligations of businesses operating in the U.S. Businesses engaging in these activities should engage and work with experienced legal counsel to avoid costly missteps like Danco’s.
We hope this update is helpful. For more information about these or other health or other legal, management or public policy developments, please contact the author Cynthia Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
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About the Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely-known for 35 plus years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications.
A Fellow in the American College of Employee Benefit Counsel, Chair of the American Bar Association (“ABA”) International Section Life Sciences and Health Committee, Chair-Elect of the ABA TIPS Section Medicine & Law Committee, Past Chair of the ABA Managed Care & Insurance Interest Group, Scribe for the ABA JCEB Annual Agency Meeting with HHS-OCR, past chair of the ABA RPTE Employee Benefits & Other Compensation Group and current co-Chair of its Welfare Benefit Committee, Ms. Stamer is most widely recognized for her decades of pragmatic, leading-edge work, scholarship and thought leadership on health and managed care and employer benefits legal, public policy and operational concerns in the healthcare, employer benefits, and insurance and financial services industries. She speaks and publishes extensively on HIPAA and other related compliance issues.
Ms. Stamer’s work throughout her career has focused heavily on working with health care and managed care, health and other employee benefit plan, insurance and financial services and other public and private organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns.
For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
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