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.

Pfizer to Pay $2.3 Billion in Largest Healthcare Fraud Settlement in Government’s History

by Nolan and Auerbach on September 2, 2009

Pfizer Inc. and its subsidiary Pharmacia & Upjohn Company Inc. have agreed to pay $2.3 billion to resolve criminal and civil liability arising from the illegal promotion of certain pharmaceutical products, the Justice Department announced September 2, 2009.

Pharmacia & Upjohn Company has agreed to plead guilty to a felony violation of the Food, Drug and Cosmetic Act for misbranding Bextra with the intent to defraud or mislead. Pfizer promoted the sale of Bextra for several uses and dosages that the FDA specifically declined to approve due to safety concerns.

In addition, Pfizer has agreed to pay $1 billion to resolve allegations under the civil False Claims Act that the company illegally promoted four drugs – Bextra; Geodon, an anti-psychotic drug; Zyvox, an antibiotic; and Lyrica, an anti-epileptic drug – and caused false claims to be submitted to government health care programs for uses that were not medically accepted indications and therefore not covered by those programs. The civil settlement also resolves allegations that Pfizer paid kickbacks to healthcare providers to induce them to prescribe these, as well as other, drugs.

Additional whistleblower lawsuits filed under the qui tam provisions of the False Claims Act are pending, according to a September 2 press release by the United States Department of Justice.

For the full press release, go to: http://www.usdoj.gov/opa/pr/2009/September/09-aag-900.html.

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

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Small Case Nets Government $3.9 Million for Alleged Medicaid Fraud

by Nolan and Auerbach on August 14, 2009

Special Design Healthcare, a Cape Girardeau, Mo.-based pharmacy, has settled with the U.S. and states of Missouri and Illinois to pay $3.9 million for allegations of Medicaid fraud. According to an article in the August 13, 2009 Chicago Tribune, the pharmacy’s owner is charged with submitting false and fraudulent claims to the two states’ Medicaid programs.

Between October 2002 to June 2006, prosecutors “allege the pharmacy billed Missouri and Illinois Medicaid for more drugs than it purchased, charged for brand name medicine when it dispensed generic, and billed without proper medical authorization,” according to the Chicago Tribune article.

For the full article, go to: http://www.chicagotribune.com/news/chi-ap-mo-medicaidfraud,0,6683688.story.

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

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Quality Control Violation Reports Prompt Drug Maker Mylan to Halt Production, Launch Probe

by Nolan and Auerbach on July 28, 2009

While Mylan has not publically acknowledged serious problems at its generic drug manufacturing facility, the Pittsburgh Post-Gazette has obtained internal reports alleging that employees at the Morgantown, W. Va. plant have violated government-mandated quality control procedures. According to the Post-Gazette, “… workers were routinely overriding computer-generated warnings about potential problems with medications… .”

Current Good Manufacturing Violations may render pharmaceuticals to be adulterated and may also be the basis of False Claims Act violations. In particular, falsification in CGMP record-keeping may be false records or statements that cause false claims for such adulterated pharmaceuticals to be submitted to Government payors.

Mylan is the world’s third largest generic drug company and the plant in Morgantown produces about 19 billion doses of medicine each year to treat diabetes, hypertension, depression, cancer, epilepsy and other conditions, according to the article.

It is unclear whether the multiple and serious FDA violations in the report resulted in tainted medications.

For the full article, go to: http://www.post-gazette.com/pg/09207/986516-28.stm.

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

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Grassley Probes into Ghostwriting Practices that May Result in Pharmaceutical Fraud

by Nolan and Auerbach on July 11, 2009

United States Senator Charles E. Grassley of Iowa has asked eight leading medical journals to describe their ghostwriting policies and practices. The inquiry is part of his broader effort to establish transparency with regard to financial relationships between the pharmaceutical industry and medical professionals, according to a July 2, 2009 press release by the senator. Such financial relationships can lead to pharmaceutical fraud practices, such as off-label marketing.

In December, Grassley wrote to Wyeth and DesignWrite, a medical education and communications company, regarding allegations that Wyeth hired DesignWrite to draft articles promoting the company’s hormone therapy products and seek academic investigators to sign on as the primary authors. Previously, Grassley had written to Merck and Scientific Therapeutics Information, a medical publishing company, regarding similar allegations reported in the Journal of the American Medical Association related to articles on Merck’s VIOXX studies.

He sent the letter on July 1 to the American Journal of Medicine, the Annals of Internal Medicine, the Annual Review of Medicine, the Archives of Internal Medicine, Nature Medicine, PLoS Medicine, The Journal of the American Medical Association and The New England Journal of Medicine. Grassley asked for the editors’ written responses by July 22, 2009.

For the full press release, go to: http://finance.senate.gov/press/Gpress/2009/prg070209.pdf.

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

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Major Medical Journal No Longer to Silence Whistleblowers

by Nolan and Auerbach on July 10, 2009

A recent move by a major medical journal could provide more timely disclosure of alleged undisclosed conflicts of interests between researchers and pharmaceutical companies. The Wall Street Journal reported July 7, 2009, that the Journal of the American Medical Association (JAMA) has softened its policy demanding that anyone filing a complaint about unreported conflicts of interest must not reveal the information to third parties or the media while the investigation is underway. In an editorial published early in July in JAMA, editors modified the policy so that it does not explicitly require silence during the investigation, according to the Wall Street Journal.

JAMA has been criticized “for taking five months to acknowledge that a study it published last year on the use of antidepressants in stroke patients was written by a University of Iowa psychiatrist who failed to disclose he had a financial relationship with the maker of the drug studied,” according to the article.

For the full article, go to: http://online.wsj.com/article_email/SB124700923018308521-lMyQjAxMDI5NDA3NzAwMDc5Wj.html.

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

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Effect on Off-Label Marketing in the 2010 Budget Details?

by Nolan and Auerbach on June 9, 2009

The Department of Health and Human Services recently released its budget proposal for 2010. As it relates to the FDA, HHS is looking to build

on the  $1.1billion included in the recovery Act for comparative effectiveness research.  The funds requested will continue efforts to produce state-of-the-science information on what medical treatments work best for a given condition.

Not only will these  findings enhance medical decision-making by patients and their physicians,  they will likely  close the door a little bit more to the success of off-label marketing of pharmaceuticals for indications that have little to no science to back up the claims of efficacy. Physicians will hopefully have a readily available source from which to compare treatments and drugs.

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Eli Lilly has Fighting Words for W. Virginia Attorney General

by Nolan and Auerbach on June 9, 2009

Attorneys representing Eli Lilly & Co. claim that the civil penalties sought by West Virginia Attorney General Darrell McGraw for the pharmaceutical manufacturer’s alleged mislabeling violations are inappropriate and unreasonable, according to a June 8, 2009 article by John O’Brien on LegalNewsline.com.

West Virginia is asking $2 billion under the state’s Consumer Credit and Protection Act, related to the drug company’s dissemination of an alleged inadequate label on its Zyprexa antipsychotic product. The lawsuit claims that Eli Lilly should be punished for disseminating the inadequate label.

Eli Lilly claims West Virginia is overstepping its bounds and into those of the FDA.

According to the article, the motion also says that penalizing Eli Lilly $5,000 for each Zyprexa prescription distributed from Feb. 28, 2002-Oct. 2007 (which is about 400,000 with the alleged improper labeling) would “lead to a grossly disproportionate punishment” under the U.S. Constitution.
In January, Eli Lilly agreed to pay $1.4 billion to settle federal civil and criminal claims. The payment also benefited the Medicaid programs of more than 30 states that collectively received approximately $362 million, according to the article on LegalNewsline.com.

To read the article in its entirety, go to: http://www.legalnewsline.com/news/221408-eli-lilly-w.vas-claim-for-civil-penalties-inappropriate-greedy.

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

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Wyeth under Fire for Alleged Medicaid Fraud

by Nolan and Auerbach on May 21, 2009

The U.S. government and 16 states have joined in two whistleblower suits against pharmaceutical giant Wyeth. The drug company allegedly failed to pay hundreds of millions in rebates to the Medicaid program, according to a May 18, 2009 release by the U.S. Department of Justice.

The suit alleges that Wyeth knowingly failed to give the government the same discounts it provided to private purchasers, as required by Medicaid law. According to the release, between 2000 and 2006, Wyeth offered steep discounts to thousands of hospitals nationwide for the drugs Protonix Oral and Protonix IV, two proton pump inhibitors used to suppress stomach acid. This pricing arrangement required that the hospitals purchase both drugs together, under a so-called “bundled” arrangement and it offered them a steep discount for doing so. Wyeth did this in part to gain access to the far more lucrative retail outpatient market, intending that patients who used the intravenous version of Protonix in the hospital would later purchase Protonix Oral once discharged. Under the bundled arrangement, hospitals that placed both products on their formularies and attained certain market share requirements were entitled to up to a 94% discount off the list price of Protonix Oral and up to 80% off the list price of Protonix IV. Although Wyeth was required under the Medicaid Drug Rebate Program to determine the effective prices paid by hospitals under this arrangement and to pass along the benefit of the lowest prices to the state Medicaid programs, Wyeth allegedly failed to do so.

For more on this case, go to US DOJ website

For more information about Qui Tam law,  Medicare Fraud and Health Care Fraud , contact Nolan and Auerbach, PA.

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STOP Act Charged with Curbing Medicare Fraud

by Nolan and Auerbach on May 21, 2009

National organizations, including AARP, are endorsing the bipartisan “Seniors and Taxpayers Obligation Protection (STOP) Act,” which is awaiting senate vote. Sponsored by Senators Mel Martinez (R-FL), Bill Nelson (D-FL) and John Cornyn (R-TX), this legislation is aimed at curbing the billions of dollars spent on Medicare fraud each year.

Senators backing the bill say it would help to improve Health and Human Services’s (HHS’s) detection methods and place billing statements under increased scrutiny.

If it becomes law, HHS would identify the 50 counties most vulnerable to fraud and take a watch dog approach to carefully monitoring these designated “high-risk” fraud areas.

Among the many things it would do, the legislation would require that HHS establish a tracking system for certain durable medical equipment, and change the current system of using social security numbers as the Medicare Beneficiary Identifier used on Medicare cards.

To learn more about the bill, go to http://www.govtrack.us/congress/bill.xpd?bill=s110-3164&tab=summary or http://www.opencongress.org/bill/110-s3164/show.

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

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Senator Requests Clarification of Recent Memo to FDA Employees

by Nolan and Auerbach on March 25, 2009

U.S. Sen. Chuck Grassley wrote a letter on March 24, 2009 to FDA’s acting commissioner asking for clarification of a recent memo to FDA employees, warning agency employees of their obligations to keep certain information confidential.

In the letter, addressed to Frank M. Torti, MD, MPH, Grassley writes: “While I appreciate the fact that some information, including certain business trade secrets, needs to be protected from unauthorized disclosures, I have serious concerns that your memorandum goes beyond legitimate privacy concerns and appears to run contrary to many statutes protecting executive branch communications with members of Congress.

Specifically, your memorandum notes that certain information acquired from businesses and industry is protected as confidential and may only be disclosed in limited circumstances. Your memorandum cited the Food, Drug, and Cosmetic Act, the Freedom of Information Act (FOIA), the Trade Secrets Act, and the Privacy Act, as well as FDA regulations as the controlling authority for determining when a document or information may be disclosed. You added that FDA employees who violate these provisions may face disciplinary sanctions and criminal liability.”

Grassley’s concern is that FDA employees should have the right to talk to Congress and to provide Congress with information free and clear of FDA agency influence. Further, these employees have the right to be free from fear of retaliation or reprisal, he writes.

For the letter in its entirety, go to http://www.iowapolitics.com/index.iml?Article=153174. For more information about qui tam law and health care fraud, including pharmaceutical fraud, contact Nolan and Auerbach, PA.

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