Are Specialty Pharmaceutical Companies Bribing Their Way into the Market?

In 2002, after several member-pharmaceutical companies paid out substantial fines for violating the federal Anti-kickback Statute, the industry trade association Pharmaceutical Research and Manufacturers of America (PhRMA) adopted a new marketing code for its members to aspire to abide.

While the kickback reigns may have been pulled back within some companies, there are pharmaceutical companies that still may be deploying the kickback schemes of the 1990s. Oftentimes, these schemes are developed from senior management, who are pressured to buy their way into a market that has been dominated by an established pharmaceutical company.

Such tactics may have played a role in a recent $11.4 million False Claims Act settlement involving specialty pharmaceutical company Victory Pharma, Inc. In this intervened False Claims Act qui tam action, the company allegedly engaged in a scheme to promote its drugs by paying physicians blatant kickbacks to switch from competitor products. The company’s alleged kickbacks included tickets to professional and collegiate sporting events; tickets to concerts and plays; spa outings; golf and ski outings; dinners at expensive restaurants; and numerous other out-of-office events.

When sales representatives raised questions about the legality of such promotions, senior management allegedly declared that only PhRMA companies were bound by the Code against kickbacks. Moreover, company officials allegedly touted this freedom from constraints as an advantage over PhRMA competitors.

More information for whistleblowers is located at the Nolan Auerbach website.