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.

Texas Hospital Group Pays $27.5 Million for False Claims Act Allegations

by Nolan and Auerbach on November 4, 2009

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

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FDA’s Postmarketing Studies and Clinical Trials Draft Guidance Gets Supported By Public Citizen

by Nolan and Auerbach on November 2, 2009

In an October 13 letter to the FDA, the well respected consumer advocacy organization Public Citizen, gave a strong endorsement to the FDA Draft Guidance on Postmarketing Studies and Clinical Trials. In letter, Public Citizen’s Deputy Director Peter Lurie MD, MPH, and Sidney M. Wolfe, MD, wrote: “Public Citizen has reviewed the draft guidance in detail and supports its purpose and approach. The guidance makes a sensible distinction between studies that are for efficacy purposes only (“postmarketing commitments….”) and those that have any significant safety element (“postmarketing requirements….”). The categories of studies that can fall under postmarketing requirements (observational studies, clinical trials, animal studies, in vitro studies, pharmacokinetic studies, and interaction/bioavailability studies) are appropriately broad. We urge you to resist any efforts to weaken the draft guidance.” (Emphasis supplied)

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.

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FDA’s Postmarketing Studies and Clinical Trials Draft Guidance Gets Supported By Public Citizen

by Nolan and Auerbach on November 2, 2009

In an October 13 letter to the FDA, the well respected consumer advocacy organization Public Citizen, gave a strong endorsement to the FDA Draft Guidance on Postmarketing Studies and Clinical Trials. In letter, Public Citizen’s Deputy Director Peter Lurie MD, MPH, and Sidney M. Wolfe, MD, wrote: “Public Citizen has reviewed the draft guidance in detail and supports its purpose and approach. The guidance makes a sensible distinction between studies that are for efficacy purposes only (“postmarketing commitments….”) and those that have any significant safety element (“postmarketing requirements….”). The categories of studies that can fall under postmarketing requirements (observational studies, clinical trials, animal studies, in vitro studies, pharmacokinetic studies, and interaction/bioavailability studies) are appropriately broad. We urge you to resist any efforts to weaken the draft guidance.” (Emphasis supplied)

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.

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Biotech Company and Its Top Management Indicted for Illegal Promotion, Making False Statements to the FDA

by Nolan and Auerbach on October 30, 2009

The Federal Bureau of Investigation (FBI) Boston announced October 28, 2009, that Stryker Biotech and its top management had been indicted for illegal promotion of medical devices used in surgery. The Hopkinton, Mass.-based biotech and some of its employees were charged in federal court with participating in a fraudulent marketing scheme of medical devices used during invasive spinal and long bone surgeries, as well as with making false statements to the United States Food and Drug Administration (FDA).

According to the FBI’s press release, the allegations are that all the defendants participated in an illegal, off-label marketing scheme to promote medical devices used during invasive surgeries. In particular, the defendants are alleged to have promoted devices used to stimulate bone growth in long bones and the spine, which have highly restrictive FDA approval, for off-label, more widespread uses.

For the full press release, go to: http://boston.fbi.gov/dojpressrel/pressrel09/bs102809.htm.

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

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Four Pharmaceutical Companies Pay $124 Million for False Claims Act Violations

by Nolan and Auerbach on October 26, 2009

Mylan Pharmaceuticals, UDL Laboratories, AstraZeneca Pharmaceuticals and Ortho McNeil Pharmaceutical have entered into settlement agreements for a total of $124 million to resolve claims that they violated the False Claims Act by failing to pay appropriate rebates to state Medicaid programs for “authorized generics” paid for by those programs, the U.S. Department of Justice announced October 19, 2009.

By agreeing to participate in the Medicaid Rebate Program and signing these rebate agreements, the four companies agreed to pay quarterly rebates to Medicaid that were based upon the amount of money that health care program paid for each company’s drugs. The precise amount of a rebate is determined in part by whether a drug is considered an “innovator” drug or a “non-innovator” drug. The rebate that must be paid for innovator drugs is higher than the rebate for non-innovator drugs.

Each of the companies agreed to pay a settlement to resolve allegations that it had sold innovator drugs that were manufactured by other companies and had classified those drugs as non-innovator drugs for Medicaid rebate purposes. As a result of the improper classification of these drugs, the companies underpaid their rebate obligations under the Medicaid Rebate Program. The drugs include Mylan’s nifedipine extended release tablets, UDL’s Selegiline HCL, AstraZeneca’s Albuterol, Ortho McNeil’s Dermatop and others.

For the full release, go to: http://www.usdoj.gov/opa/pr/2009/October/09-civ-1120.html.

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

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New GAO Report Uncovers Massive Pharmaceutical Fraud

by Nolan and Auerbach on September 30, 2009

The U.S. Government Accountability Office (GAO) released a report in September 2009 looking at fraud and abuse related to controlled substances paid for by Medicaid.

According to GAO’s summary of the report, the government agency found tens of thousands of Medicaid beneficiaries and providers involved in potential fraudulent purchases of controlled substances, abusive purchases of controlled substances, or both through the Medicaid program. The report looked specifically at California, Illinois, New York, North Carolina, and Texas.

Key findings include:

  • About 65,000 Medicaid beneficiaries in the five selected states acquired the same type of controlled substances from six or more different medical practitioners during fiscal years 2006 and 2007 with the majority of beneficiaries visiting from 6 to 10 medical practitioners. Such activities, known as doctor shopping, resulted in about $63 million in Medicaid payments and do not include medical costs (e.g., office visits) related to getting the prescriptions.
  • Medicaid paid over $2 million in controlled substance prescriptions during fiscal years 2006 and 2007 that were written or filled by 65 medical practitioners and pharmacies barred, excluded, or both from federal health care programs, including Medicaid, for such offenses as illegally selling controlled substances.
  • Pharmacies filled controlled substance prescriptions of over 1,800 beneficiaries who were dead at that time.

For the full report and GAO recommendations, go to http://www.gao.gov/new.items/d09957.pdf.

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

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Pharma Co. to pay more than $24 million for kickback, conspiracy charges

by Nolan and Auerbach on September 15, 2009

Biovail Pharmaceuticals, LLC, has pled guilty to conspiracy and kickback charges and has been sentenced to pay a criminal fine of more than $22 million. These charges concern various actions by the New Jersey-based pharmaceutical company and its employees to carry out a program in which Biovaile paid or cause to be paid up to $1,000 to thousands of physicians and others in order to induce them to prescribe or recommend the drug Cardizem, L.A.

BioVail Pharmaceuticals will also pay more than $2.4 million to the United States to resolve allegations that this conduct caused false claims to be submitted to the United States, according to a September 14, 2009 press release by the Massachusetts Department of Justice.

For the full press release, go to: http://www.usdoj.gov/usao/ma/Press%20Office%20-%20Press%20Release%20Files/Sept2009/BiovailPlea.html.

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

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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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