U.S. Attorney's Office
Eastern District of Pennsylvania
July 31, 2024
PHILADELPHIA – United States Attorney Jacqueline C. Romero announced today that Avantor, Inc., based in Radnor, PA, has agreed to pay a total of $5.325 million to resolve multiple alleged violations of federal law.
False Claims Act Resolution
First, Avantor has agreed to pay $5 million to resolve allegations that one of its subsidiaries, VWR International, LLC (VWR), violated the False Claims Act by fraudulently overcharging federal agencies for goods purchased between 2008 and 2017 (the “False Claims Act Settlement”). Avantor acquired VWR in 2017.
VWR is a global distributor of scientific and technical laboratory supplies, including chemicals, glassware, instruments, protective clothing, and production supplies. VWR has entered into procurement contracts with agencies of the United States to sell their products under agreed terms, including provisions under which VWR agrees to offer or provide federal government purchasers buying goods from VWR with the same or better prices that VWR offered or provided to an agreed-upon, private-sector basis of award customer (“Most Favored Customer Pricing”).
The United States’ allegations under the False Claims Act arise from four government contracts VWR entered into with government agencies. These contracts include two Multiple Award Schedule Contracts (“GSA MAS Contracts”) VWR entered into with the U.S. General Services Administration (GSA) in 1995 and in 2015, which provided a streamlined process for federal government buyers to purchase goods from VWR at discounted prices and required VWR to meet specified conditions. Several different United States agencies, including the Department of Defense, purchased VWR products under the GSA MAS Contracts, which provided for Most Favored Customer Pricing. The contracts at issue also include a 2001 Blanket Purchase Agreement that VWR entered into with the National Institutes of Health (NIH), an agency of the U.S. Department of Health and Human Services, and a 2005 contract VWR entered into with the U.S. Department of Veterans Affairs (VA) under Federal Supply Schedule 65 VI. Both the NIH and VA made purchases from VWR under their respective contracts, which both contained best price provisions.
The United States alleged that VWR violated the False Claims Act when performing its obligations under these government contracts (the “Schedule Contracts”) by:
- Failing to offer or provide federal government purchasers buying goods from VWR under the Schedule Contracts with Most Favored Customer Pricing;
- Increasing pricing for federal government purchasers, while not increasing prices for the Most Favored Customer;
- Failing to provide federal government purchasers with the same rebates, discounts, incentives, and other favorable terms offered to the Most Favored Customer;
- Failing to report and adjust the prices that VWR offered to federal government purchasers to be consistent with those offered to the Most Favored Customer;
- Failing to report and reduce prices or make refunds to federal government purchasers, as required by the Price Reductions Clauses in the Schedule Contracts; and
- Failing to report changes in VWR’s commercial pricing practices or policies from those disclosed to the federal government during the parties’ pricing negotiations, and to reduce federal government pricing accordingly.
The United States alleged that, as a result of this conduct, VWR knowingly submitted false or fraudulent claims for payment to the United States in violation of the False Claims Act.
“Contractors are expected to understand and carefully comply with the requirements of federal contracts,” said U.S. Attorney Romero. “This settlement under the False Claims Act demonstrates that the federal government will hold accountable contractors that overcharge agencies by failing to follow the pricing terms of federal contracts, and should be seen as a warning to contractors that false claims have no place in government purchasing.”
“GSA’s Office of the Inspector General will continue to investigate any allegations of GSA contractors overcharging federal agencies at the expense of American taxpayers,” said GSA Acting Inspector General Robert Erickson. “I appreciate the hard work of those who worked on this case.”
“Companies that contract with the U.S. Department of Health and Human Services are required to abide by the set agreements including charging the same or better prices as other customers,” said Maureen R. Dixon, Special Agent in Charge of the Philadelphia Regional Office of the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “HHS-OIG takes allegations of false claims in contracts seriously and will continue to work with our law enforcement partners to ensure the integrity of the federal contracting process.”
“The integrity of the DoD procurement process is of vital importance to the DoD Office of Inspector General’s Defense Criminal Investigative Service (DCIS),” stated Brian J. Solecki, Acting Special Agent in Charge of the DCIS Northeast Field Office. “The DoD expects its contractors to adhere to contract requirements and the DCIS will continue to work with its law enforcement partners and the Department of Justice to ensure DoD contractors who engage in fraudulent activity at the expense of the U.S. Military are held accountable for their actions.”
The False Claims Act Settlement also resolves a lawsuit originally brought by Adrian G. Scioli, a former VWR employee, under the whistleblower, or qui tam, provisions of the False Claims Act. The Act permits private citizens with knowledge of fraud against the government to bring a lawsuit on behalf of the United States and to share in any recovery. Scioli will receive approximately $1,100,000 of the settlement. The lawsuit is captioned United States et al., ex rel. Scioli v. VWR International, LLC, et al., No. 17-cv-2574 (E.D. Pa.).
The False Claims Act Settlement was the result of a coordinated effort between the U.S. Attorney’s Office for the Eastern District of Pennsylvania, the GSA Office of Inspector General, the U.S. Department of Health and Human Services Office of Inspector General, the U.S. Department of Veterans Affairs Office of Inspector General, and the Defense Criminal Investigative Service.
The False Claims Act matter is being handled in the U.S. Attorney’s Office by Assistant United States Attorneys Lauren DeBruicker and Mark J. Sherer, and Auditor Dawn Wiggins.
DEA Resolution
In addition, Avantor has agreed to pay $325,000 to resolve allegations that it and its subsidiaries, including VWR, failed to comply with a number of compliance obligations between 2013 and 2023 pertaining to its dealings in listed chemicals, which are regulated by the Drug Enforcement Administration (DEA). The company also entered into an administrative agreement with the DEA that imposed a variety of heightened accountability obligations.
Certain chemicals are categorized as listed precursor chemicals, i.e., chemicals, which in addition to their legitimate uses, can be used in manufacturing a controlled substance in violation of federal law and are important to the manufacture of the controlled substances. Those listed chemicals are divided into two groups: List I chemicals and List II chemicals. Avantor is a chemical importer, manufacturer, distributor, and exporter registered with the DEA at various locations across the United States.
Companies that conduct international imports and exports of List I chemicals are generally required to submit at least two separate reports to the DEA for each transaction: (1) a notification of the transaction to the DEA prior to any import or export; and (2) a return declaration to the DEA containing particulars of the transaction that was completed, including the date, quantity, chemical, container, and name of transferees.
In addition, when a regulated person engages in a regulated transaction involving a listed chemical, the company is required to maintain records of that transaction. The records must include the name, address, contact information, and, if required, DEA registration number of each party to the regulated transaction; the date of the regulated transaction; the quantity, chemical name, and the form of packaging; the method of transfer; and the type of identification used by the purchaser and any unique number on that identification.
The DEA conducted a number of inspections of Avantor’s facilities over the past several years, during which it alleges it identified violations of its listed chemical obligations by Avantor, including inspections at its Paris, Kentucky, facility; its Manati, Puerto Rico, facility; and its Bridgeport, New Jersey, facility.
The United States alleged that Avantor failed to comply with its listed chemical compliance obligations in a number of ways at these facilities, between 2013 and 2023. For example, the settlement agreement alleges that Avantor committed the following violations, at certain periods of time and at certain of its facilities:
- received and distributed listed chemicals while failing to properly document the correct registration number or the customer’s registration number;
- repackaged chemicals under an improper registration number;
- exported listed chemicals under the wrong registration number;
- failed to properly annotate information on DEA import/export forms;
- shipped chemicals that met or exceeded its threshold without making the required submission to DEA.
Avantor self-disclosed some of the alleged violations with respect to its exporter registration in Paris, Kentucky.
The United States alleged that, as a result of this conduct, it had certain civil claims against Avantor under the Controlled Substances Act. There are no allegations that the listed chemicals at issue here were used to manufacture illicit controlled substances.
In addition to the monetary component, the company also entered into an administrative agreement with the DEA. The agreement imposes a number of reporting and compliance obligations on the company for a period of time.
“Companies that deal in listed chemicals are held to high standards since the chemicals can be used to manufacture illicit controlled substances,” said U.S. Attorney Romero. “It is critical that companies live up to the compliance obligations imposed by federal law and regulation to ensure accountability and proper monitoring.”
“Listed chemicals can be used as precursors to illicitly manufacture dangerous synthetic drugs, such as fentanyl and methamphetamine,” said Thomas Hodnett, Special Agent in Charge of the Drug Enforcement Administration’s (DEA) Philadelphia Field Division. “It is essential to public safety and the lives of Americans that all companies handling listed chemicals—including large-scale chemical enterprises operating domestically and abroad—adhere closely to DEA regulations.”
The DEA Settlement was the result of a coordinated effort between the U.S. Attorney’s Office for the Eastern District of Pennsylvania, the DEA Philadelphia Field Division, and DEA Headquarters, including the DEA Office of Chief Counsel and the DEA Diversion Control Division Chemical Investigations Section. Additional assistance was provided by the DEA Caribbean Field Division, DEA Louisville Field Division, DEA Atlanta Field Division, DEA Chicago Field Division, and DEA New Jersey Field Division.
The DEA matter is being handled in the U.S. Attorney’s Office by Assistant United States Attorney Anthony D. Scicchitano, with assistance from Frank O’Connor, Jeffrey Braun, and Andrew Schobert.
The claims resolved by these settlements are allegations only; there has been no determination of liability.
Source: U.S. Attorney's Office press release
