Eli Lilly and Co. and Astellas Pharma US, Inc. must face a whistleblower’s allegations they violated the False Claims Act by defrauding the Medicaid Drug Rebate Program.

The complaint alleges enough details about the purported schemes to survive dismissal, the U.S. District Court for the Northern District of Illinois said April 3.

Ronald J. Streck, a former executive of a network of drug regional wholesalers, filed the FCA whistleblower suit on behalf of the U.S. and 26 states.

The Medicaid Drug Rebate Program is designed to offset the cost of prescription drugs provided to Medicaid patients. Participating manufacturers must rebate to the government a portion of the proceeds of their drug sales that are covered by a state’s Medicaid plan.

The rebate is based on the Average Manufacturer’s Price, which is the average price wholesalers pay participating manufacturers for drugs. The lower the AMP, the lower the rebate that the manufacturer must pay to the government.

Streck alleges Lilly and Astellas Pharma used two separate improper methods to lower their AMPs, which in turn lowered the rebates that they paid under the rebate program.

The whistleblower alleges sufficient facts, at least to survive the drugmakers’ dismissal bid, to support his assertions that Lilly and Astellas Pharma knew that what they were doing was illegal, the court said.

Judge Harry D. Leinenweber issued the opinion.

Berger Montague PC, Faruqi & Faruqi, LLP, and Behn & Wyetzner, Chartered represent Streck.

Sidley Austin LLP represents Astellas.

Pepper Hamilton LLP, and Faegre Baker Daniels LLP represent Lilly.

The case is United States ex rel. Streck v. Takeda Pharm. Am., Inc., 2019 BL 118308, N.D. Ill., No. 14-cv-9412, 4/3/19.