According to the qui tam complaint, several pharmaceutical companies, including Ethex Corporation, had, time and time again, deceived the government by falsely certifying that their unapproved drugs had passed the requisite FDA tests for safety and effectiveness, or otherwise met with the statutory definition of a Covered Outpatient Drug. These false certifications allowed the drug companies to peddle their unapproved products to physicians of Medicaid patients and to wrongfully receive payments from Government Health Care Programs.

This settlement quieted allegations that Ethex continued to market and receive government health care dollars for two medications that had lost FDA approval. The two medications, Nitroglycerin Extended Release Capsules and Hyoscyamine Sulfate Extended Release Capsules, lost their approvals in April of 1999 and March of 1997, respectively. The company is alleged to have intentionally failed to notify the Centers for Medicare & Medicaid Services(CMS) that these medications were no longer a covered outpatient drug.

Under the federal Food, Drug & Cosmetic Act, 21 U.S.C. § 301 et seq., every drug must be approved by the FDA for safety and effectiveness before it can be marketed to the public. These drugs were not. Ultimately, the FDA determines whether the drug is safe and effective in its proposed use(s), whether the benefits of the drug outweigh the risks, and whether the methods used in manufacturing the drug and the controls used to maintain the drug’s quality are adequate to preserve the drug’s identity, strength, quality, and purity.

Nolan & Auerbach, P.A. has taken on the responsibility of prosecuting the remaining defendants identified in this qui tam action under the civil False Claims Act.

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

In recent years, however, pharma companies have become increasingly clever in disguising illegal kickbacks. Most prominent are massive speaker bureaus, speaker programs, and advisory boards, all in an attempt to disguise excessive payments as fees for “speaking engagements,” “consulting services” or “training sessions.” Typically, instead of recruiting speakers and consultants based on their experience or credentials, dishonest companies will target physicians based on their potential prescription-writing volume. Furthermore, once physicians are accepted into their programs, the companies will unofficially require speakers to meet minimum prescription levels.  Payment for “Research” and the collection of data are other techniques still used by wayward pharmaceutical companies.

The AKA is violated when a person or entity makes or accepts payment for referring, recommending or arranging for federally-funded medical items or services, including items or services provided under the Medicare, Medicaid, and TRICARE programs. Violations of the AKA are per se violations of the federal False Claims Act, the government’s primary pharmaceutical fraud-fighting weapon.

Pharmaceutical companies conduct extensive return-on-investment analysis in devising and implementing sophisticated marketing schemes and programs. Dishonest pharmaceutical companies will skirt the AKA, knowing their bribes will influence prescribing habits and, in turn, result in the provision of goods and services that are more expensive and/or medically unnecessary or even harmful to a vulnerable patient population.  Over the last fifteen years, dozens of pharmaceutical companies have shelled out multimillion dollar settlement checks to quiet allegations that they showered doctors with illegal kickbacks. Up to several years ago many kickbacks were blatant bribes, including outright “grants,” tickets to sporting events, and other gifts and benefits.

Most illegal kickbacks to doctors are thinly-veiled incentives for off-label prescriptions, for uses that do not work. These business practices cause federal and state government health care programs to pay millions of dollars for prescriptions which are ineligible for payment. Notably, while a physician may prescribe a drug off-label, the law prohibits the provider from inking a kickback-tainted prescription for a Government Health Care Program beneficiary.

The government simply doesn’t have the resources to unravel these schemes, unless pharmaceutical employees and health care providers courageously provide the necessary inside information. For those who do take this stand, the rewards are potentially worth millions.

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

That allegedly didn’t stop Healthpoint from continuing to manufacture and market Xenaderm. The DOJ claims the total cost to Medicaid from this fraud exceeds $90 million.

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

Applied to the pharmaceutical world, the Anti-Kickback Act, 42 U.S.C. § 1320a-7b(b), makes it illegal for a drug company to bride a doctor to prescribe its drugs. The Anti-Kickback Act is designed to, inter alia, ensure that patient care is not improperly influenced by inappropriate compensation from the pharmaceutical industry.

There are a variety of rules and exceptions that come into play when assessing whether a drug company’s payments to a doctor violates the Anti-Kickback Act. However, at the end of the day, the question boils down to whether the drug company was looking to improperly influence the doctor’s prescribing habits. If the company was looking to bribe its way into the medicine cabinets of Medicare and Medicaid patients, the payments were likely illegal kickbacks, under the federal Anti-Kickback Act.

To encourage insiders to step forward and report these shadowy payments, the US Congress recently clarified, in the federal health care reform legislation, that violations of the federal Ant-Kickback Act are per se violations of the federal False Claims Act. In turn, if a person has detailed information about a drug company bribing doctors to prescribe its drugs, that person might receive a substantial whistleblower reward.

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

While this is the first False Claims Act qui tam settlement involving cGMP violations, this application of the FCA has been on the radar screen of leading FCA practitioners for years. (For example, in 2004, Kenneth Nolan, founding partner of the national whistleblower firm of Nolan & Auerbach, P.A., penned a 2004 article and a 2008 book chapter on this very topic.) Indeed, similar qui tam actions have been filed and are currently working their way through the Justice Department’s litigative pipeline. 

The FCA has implications for cGMP violations because the federal government (funding as it does the Medicare program, the majority of state Medicaid programs, the Veterans Administration, the TRICARE program, and others) is the world’s largest purchaser of prescription medications. Because the FCA imposes liability on any government contractor that knowingly submits false claims to the government or that uses false documents to get a false claim paid, a drug company which knew or was recklessly indifferent to the fact that the manufacturing process was compromised by cGMP violations is in violation of the FCA. The basis of liability under the FCA is that false records have been generated which caused (false) claims for drugs to be paid by the government. The monetary damages result because the government is potentially paying for substandard drugs due to the cGMP violations – later covered up by false statements in documents required to be completed under the cGMP.

With that being said, the government is just now dipping its toes into these FCA waters, so only the most egregious violations will likely rise to the top. When assessing whether a violation meets this high hurdle, one must determine whether the violation is severe enough such that the drug product that finally reaches the public is foreseeably substantially less safe or less effective than if the cGMPs were not violated. If the answer is yes, then for the sake of patient safety, potential whistleblowers are strongly encouraged to contact experienced False Claims Act attorneys who are familiar with the cGMP.

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

The relator filed a cert petition with the US Supreme Court, arguing that, if left intact, the decision would undermine Congress’s intent that relators pursue claims that the government is aware of but, for one reason or another, decides not to pursue. The relator also highlighted that FCA defendants, especially pharmaceutical companies, frequently include broad release language in their severance agreements. The Supreme Court was not swayed.

Some have trumpeted these decisions as an endorsement that pre-filing releases bar qui tam actions. However, these decisions only come into play in the rare instance where the government was fully aware of the relator’s specific fraud allegations involving a specific wrongdoer.

In order to wade through these legal waters, potential whistleblowers should retain experienced qui tam attorneys who are familiar with the nuances of the False Claims Act and government investigations.      

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

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.

South Texas Health System, a McAllen, Texas-based hospital group, has agreed to pay the United States $27.5 million to settle claims that it violated the False Claims Act, the Anti-Kickback Statute and the Stark Statute between 1999 and 2006. The hospital group, owned by Pennsylvania-based Universal Health Services Inc., allegedly paid illegal compensation to doctors in order to induce them to refer patients to hospitals within the group, the U.S. Department of Justice (DOJ) announced October 30, 2009.

The settlement involved allegations that the defendants had entered into financial relationships with several doctors in McAllen in order to induce them to refer patients to the defendants’ hospitals. The government alleged that these payments were disguised through a series of sham contracts, including medical directorships and lease agreements.

The settlement resolves allegations raised against both the parent and the subsidiary in a qui tam or whistleblower lawsuit, according to the DOJ.

For the full press release, go to: http://www.justice.gov/opa/pr/2009/October/09-civ-1175.html.

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

To review the draft guidance, go to: http://www.regulations.gov/search/Regs/home.html#documentDetail?R=09000064809f1ed1.

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

To review the draft guidance, go to: http://www.regulations.gov/search/Regs/home.html#documentDetail?R=09000064809f1ed1.

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