Pharmaceutical Kickbacks

Right now the pharmaceutical industry is in the middle of its biggest challenge in history. Whistleblowers have exposed and continue to expose fraudulent practices ranging from pricing issues to sales and marketing practices at a rate never anticipated by either the pharmaceutical industry or the Department of Justice. Settlements and jury verdicts have been headline grabbing and large, attracting the attention of pharma, regulators, Congress and taxpayers. The qui tam pharmaceutical fraud cases settled since 2000 alone have amounted to over 3.5 billion dollars, representing various patterns of fraud. We expect to see some new patterns as time goes by, especially with the new Medicare prescription drug benefit. Pharmaceutical fraud is still abundant and this blog is intended to keep readers up to date with all pharmaceutical fraud related news and to provide commentary when warranted. This blog also contains an array of laws and regulations concerning the Federal Food, Drug and Cosmetic Act set out in an easy to read format.

Out of the U.S. No Oversight Necessary?

by Nolan and Auerbach on June 23, 2010

Today the OIG posted “Challenges to FDA’s Ability To Monitor and Inspect Foreign Clinical Trials” (OEI-01-08-00510).

As all new investigational drugs and biologics must undergo clinical trials on human subjects to demonstrate safety and efficacy prior to approval for sale in the United States, pharmaceutical manufacturers sponsor trials involving investigators and patients both inside and outside the United States. The data in support of  a particular product’s approval therefore comes from both U.S. and foreign clinical trials. The FDA, as mandated by the Food, Drug and Cosmetic Act is charged with the responsibility of ensuring the rights, safety and well-being of subjects who participate in these trials and of verifying that the clinical trial data collected are both accurate and reliable.

In the Report, the FDA found that 80 percent of approved marketing applications for drugs and biologics contained data from foreign clinical trials. Further, over half of clinical trial subjects and sites were located outside the United States.  Astonishingly, the FDA inspected clinical investigators at less then 1 percent of foreign sites!

For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, PA.

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Consequences of Pharmaceutical Fraud Settlements: Off-Label Marketing Continues?

by Nolan and Auerbach on June 8, 2010

Reporter Susan Todd wrote a fine article in the June 6, 2010 Star –Ledger about off-label marketing.

“There are very few companies that haven’t had their turn in the wheelhouse to get a spanking,” according to a quote in the article by Ira Loss, an independent analyst who follows the pharmaceutical industry. “I tend to think the pressure put on these salesmen to hit targets and goals leads to misbehavior.”

Off-label marketing allows pharma companies to increase profit from their best-selling products. This illegal shortcut is alluring because the companies don’t invest in further FDA approvals. Pfizer generated $10 billion in about five years selling its seizure drug Neurontin for unapproved uses.

Doctors may prescribe medicines for unapproved uses, but pharma companies cross the line when their reps sell physicians on the idea of using drugs for off-label purposes, sometimes with inducements and misrepresentations.

These violations of the False Claims Act will continue, one expert said, as long as drug companies make more on off-label promoting than they lose in fines. But big financial penalties and the threat of having medicines taken off Medicare, Medicaid and other formularies could make the risk too great.

Frank Palumbo, executive director of the University of Maryland School of Pharmacy Center on Drug and Public Policy, said in the article: “I think companies are on notice at this point to make sure they’re in compliance. Adopting a corporate integrity agreement puts a company on notice that they need to be more proactive about their sales reps are doing.”

For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, PA.

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GI Drug Overhyped, Warns FDA

by Nolan and Auerbach on May 10, 2010

On May 5th, the FDA posted a letter sent to Shire Development, Inc. regarding the marketing of LIALDA, an oral sustained release multimatrix formulation of mesalazine approved in 2007. LIALDA is indicated for the induction of remission in patients with active, mild to moderate ulcerative colitis. The Warning Letter stated that a brochure used by Shire to market LIALDA is false or misleading because it overstates the efficacy of LIALDA, contains unsubstantiated superiority claims, omits risk information associated with the drug, broadens the indication of the drug, and contains unsubstantiated claims. LIALDA has been used off–label for other lower GI tract conditions, such as Crohn’s disease, general bowel infection and abdominal pain.

For more information about qui tam law and pharmaceutical fraud, contact Nolan and Auerbach, PA.

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Johnson & Johnson Subsidiaries to Pay More Than $81 Million to Resolve Allegations of Off-Label Promotion of Topamax

by Nolan and Auerbach on May 4, 2010

American pharmaceutical manufacturers Ortho-McNeil Pharmaceutical LLC and Ortho-McNeil-Janssen Pharmaceuticals Inc., both subsidiaries of Johnson & Johnson, have agreed to pay more than $81 million to resolve criminal and civil liability arising from the off-label promotion of the epilepsy drug Topamax, the U.S. Department of Justice (DOJ) announced April 29, 2010.

According to the agreement, Ortho-McNeil Pharmaceutical LLC has agreed to plead guilty to a misdemeanor and pay a $6.14 million criminal fine for the misbranding of Topamax in violation of the Food, Drug and Cosmetic Act. The Food and Drug Administration (FDA) approved Topamax as an anti-epileptic drug, for the treatment of partial onset seizures, but not for any psychiatric use.

The government alleged that Ortho-McNeil Pharmaceutical promoted the sale of Topamax for off-label psychiatric uses by hiring outside physicians to join sales representatives on their visits to health care providers’ offices, to speak at meetings and dinners about prescribing Topamax for unapproved uses and doses.

In addition to the criminal fine, Ortho-McNeil-Janssen Pharmaceuticals will pay $75.37 million to resolve civil allegations under the False Claims Act that they illegally promoted Topamax and caused false claims to be submitted to government health care programs for a variety of psychiatric uses that were not medically accepted indications and therefore not covered by those programs. The federal share of the civil settlement is $50,688,483.52, and the state Medicaid share of the civil settlement is $24,681,516.48.

The civil settlement resolves two lawsuits filed under the qui tam, or whistleblower provisions of the False Claims Act.

For the full press release, go to: http://www.justice.gov/opa/pr/2010/April/10-civ-500.html. For more information about qui tam law and health care fraud, contact Nolan and Auerbach, PA.

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AstraZeneca Agrees to $520 Million Settlement

by Nolan and Auerbach on April 28, 2010

Attorney General Eric Holder announced April 27, 2010, that AstraZeneca has agreed to pay $520 million to federal and state taxpayers to settle claims that it illegally marketed the anti-psychotic drug Seroquel for uses that were not approved as safe and effective by the Food and Drug Administration. As part of this scheme, AstraZeneca was accused of illegally promoting Seroquel to physicians off label and in violation of the federal Anti-Kickback statute, all in furtherance of supporting the drug’s use for a host of illnesses for which it was never approved, according to the U.S. Department of Justice. This pharmaceutical fraud settlement is the largest amount ever paid by a company in a civil- only settlement of off-label marketing claims. The federal government will receive $302 million, and states will share up to $218 million.

For the full announcement, go to: http://www.justice.gov/ag/speeches/2010/ag-speech-100427.html.

For more information about qui tam law and health care fraud, contact Nolan and Auerbach, PA.

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FDA Warns Pfizer About Pediatric Trials of Geodon

by Nolan and Auerbach on April 26, 2010

On April 9th, the FDA issued a Warning Letter to Pfizer, Inc. concerning its conduct during a clinical trial for one of its prescription drugs on the market. According to a Wall Street journal article (“FDA Warns Pfizer About Pediatric Trials of Geodon,” April 21, 2010) the drug (name redacted in the Warning Letter) is Geodon, which is FDA-approved to treat schizophrenia and bipolar disorder in adults. The FDA admonished Pfizer over its failure to properly monitor the clinical trials resulting in excessive doses given to pediatric subjects. The Warning Letter reads “dosing errors occurred and overdosing extended over several days for all seven pediatric subjects; in one case for as long as 22 days.” Geodon does not have a pediatric indication.

For more information about qui tam law and health care fraud, contact Nolan and Auerbach, PA.

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Alpharma to Pay $42.5 Million to Resolve False Claims Act Allegations

by Nolan and Auerbach on March 30, 2010

Pharmaceutical manufacturer Alpharma, Inc. has agreed to pay $42.5 million to resolve False Claims Act allegations in connection with the marketing of the morphine-based drug, Kadian, the U.S. Department of Justice (DOJ) announced Tuesday, March 16, 2010. The settlement resolves allegations that, between January 1, 2000 and December 29, 2008, Alpharma paid health care providers to induce them to promote or prescribe Kadian, and made misrepresentations about the safety and efficacy of the drug, which is used to treat chronic moderate to severe pain. Alpharma is now a wholly-owned subsidiary of Bristol, Tennessee-based King Pharmaceuticals, Inc.

Under this agreement, the proceeds from the settlement will be split between the federal government and various states. The settlement resolves a lawsuit brought by a whistleblower under the qui tam or whistleblower provisions of the False Claims Act, according to a DOJ press release.

For the full press release, go to: http://www.justice.gov/opa/pr/2010/March/10-civ-269.html. For more information about qui tam law and health care fraud, contact Nolan and Auerbach, PA.

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Guidant Charged in Failure to Report Defibrillator Safety Problems to FDA

by Nolan and Auerbach on March 1, 2010

Medical device manufacturer Guidant LLC, a wholly-owned subsidiary of Boston Scientific Corporation, was charged Feb. 25, 2010 with criminal violations of the Federal Food, Drug, and Cosmetic Act related to safety problems with some of its implantable defibrillators, according to a U.S. Department of Justice (DOJ) press release.

DOJ filed the criminal information in connection with an agreement with Guidant to resolve the charges. A formal guilty plea agreement is expected to be filed with the court at a later date. Boston Scientific previously announced in a November 2009 press release that the company would pay $296 million on behalf of Guidant in connection with these charges, according to the release.

According to the information filed Feb. 25 in federal district court in St. Paul, Minn., Guidant concealed information from the U.S. Food and Drug Administration (FDA) regarding catastrophic failures in some of its lifesaving devices. The charges were filed following a four-year investigation into Guidant’s handling of short-circuiting failures of three models of implantable cardioverter defibrillators (ICDs): the Ventak Prizm 2 DR (Model 1861) and the Contak Renewal (Models H135 and H155). Guidant issued safety advisories regarding the failures in June 2005.

Failure to report adverse events regarding medical devices or pharmaceutical products, as required by law, may be the basis of a False Claims Act case.

For the full release, go to: http://www.justice.gov/opa/pr/2010/February/10-civ-202.html.

For more information about qui tam law and health care fraud, contact us.

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U.S. Files Suit against Johnson & Johnson for Paying Kickbacks to Nation’s Largest Nursing Home Pharmacy

by Nolan and Auerbach on January 19, 2010

The United States has filed a civil False Claims Act complaint against drug manufacturer Johnson & Johnson (J&J) of New Brunswick, N.J., and two of its subsidiaries, Ortho-McNeil-Janssen Pharmaceuticals Inc. and Johnson & Johnson Health Care Systems Inc., the Justice Department announced in a press release January 15, 2010. The complaint alleges that these companies paid millions of dollars in kickbacks to Omnicare Inc., the nation’s largest pharmacy that specializes in dispensing drugs to nursing home patients.

The United States alleges that J&J paid kickbacks to Omnicare to induce the nursing home pharmacy company to purchase and recommend J&J drugs, including the anti-psychotic drug Risperdal, for use in nursing homes. According to the complaint, J&J understood that Omnicare’s pharmacists reviewed nursing home patients’ charts at least monthly and made recommendations to physicians on what drugs should be prescribed for those patients. The government further alleges that J&J knew that physicians accepted the Omnicare pharmacists’ recommendations more than 80 percent of the time, and that J&J viewed such pharmacists as an “extension of [J&J's] sales force.”

The United States alleges that, in order to induce Omnicare and its pharmacists to recommend J&J drugs, the company paid kickbacks to Omnicare in numerous ways. First, the complaint alleges that J&J entered into agreements with Omnicare by which Omnicare was entitled to increasing levels of rebates from Johnson & Johnson so long as Omnicare implemented specific programs to increase the prescriptions of J&J drugs. Second, the complaint alleges that J&J paid Omnicare millions of dollars for “data,” much of which Omnicare never provided. According to the complaint, the true purpose of these payments was to induce Omnicare to recommend J&J drugs. Third, the complaint alleges that J&J made various other substantial kickback payments to Omnicare, calling the payments “grants” and “educational funding,” even though their true purpose was to induce Omnicare to recommend J&J drugs, according to the release.

For the full release, go to: http://www.justice.gov/opa/pr/2010/January/10-civ-042.html.

For more information about qui tam law and health care fraud, contact Nolan and Auerbach, PA.

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Attorney General Announces $21.3 Million Medi-Cal Fraud Settlement with Schering-Plough

by Nolan and Auerbach on December 17, 2009

Attorney General Edmund G. Brown Jr. announced December 17, 2009 a $21.3 million settlement with Schering-Plough Corporation, resolving allegations the company deliberately inflated the price of Albuterol and other drugs, causing California’s Medicaid (Medi-Cal) program to overpay millions of dollars in pharmacy reimbursement.

Today’s settlement stems from a lawsuit filed by a whistleblower against several pharmaceutical companies accused of Medicaid fraud. The case is still proceeding against Dey, Inc., Mylan Pharmaceuticals, Inc., Sandoz, Inc. and their parent companies. Schering-Plough recently merged with Merck, and is now known as Merck & Co.

The settlement resolves allegations that Warrick Pharmaceuticals, a subsidiary of Schering-Plough, deliberately inflated the Average Wholesale Prices (AWPs) it reported to California for Albuterol.

For the full press release, go to: http://ag.ca.gov/newsalerts/release.php?id=1842.

For more information about qui tam law and health care fraud, contact Nolan and Auerbach, PA.

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