Pharma Fraud

November 8, 2019

In the eleventh settlement involving the multi-state OK Compounding Pharmacy fraud scheme, podiatrist Jonathan Moore of Kentucky has agreed to pay $65,404 for the role he played in defrauding federal healthcare programs.  In exchange for illegal kickbacks disguised as “medical director fees,” Dr. Moore allegedly prescribed medically unnecessary compounded pain creams to patients, many of whom were insured by Medicare and TRICARE.  USAO NDOK

November 7, 2019

Compound drug ingredient supplier Fagron Holding USA LLC has agreed to pay over $22 million to resolve two qui tam suits involving three of Fagron’s wholly-owned subsidiaries.  According to whistleblowers, Freedom Pharmaceuticals Inc. grossly inflated the price of active pharmaceutical ingredients used in compound prescriptions, causing pharmacy customers to submit false claims to TRICARE.  Other allegations involved subsidiaries Pharmacy Services Inc. and B&B Pharmaceuticals Inc., which were accused of submitting false claims to federal healthcare programs, manipulating prescription drug pricing, paying kickbacks to physicians, and illegally waiving patient copays.  DOJ

October 31, 2019

In the largest healthcare fraud case ever to come out of Mississippi, pharmacy owner Thomas Spell has been sentenced to 10 years in prison and ordered to pay over $243 million in restitution for knowingly defrauding TRICARE.  Between 2014 and 2016, Spell and his co-conspirators had deviously marketed compounded medications based on their rate of reimbursement from TRICARE, paid illegal kickbacks to marketers in order to obtain prescriptions from TRICARE beneficiaries, and improperly waived mandatory copayments for TRICARE beneficiaries.  USAO SDMS

October 29, 2019

A former resident of Atlanta has been sentenced to 1.5 years in prison and ordered to pay $306,179 in restitution for defrauding PERACare, the Colorado Public Employees Retirement Association’s health insurance plan.  For more than two years, Michael Bang allegedly submitted fraudulent reimbursement claims involving three Atlanta-area pharmacies to Express Scripts, which administers PERACare’s prescription benefits. Altogether, his scheme netted him over $300,000.  USAO NDGA

October 28, 2019

The State of Illinois has reached a settlement with more than a dozen drug manufacturers alleged to have published inflated "average wholesale prices" for drugs whose purchase was reimbursed by Illinois's Medicaid program at prices based on those false AWPs.  The settlement for $242 million includes Abbott Laboratories, Inc.; Aventis Pharmaceuticals Inc.; Aventis Behring LLC, n/k/a ZLB Behring; B. Braun Medical Inc.; Forest Laboratories, Inc.; GlaxoSmithKline LLC; Johnson & Johnson, Inc.; Janssen Pharmaceutical Products, LP; McNeil-PPC, Inc.; Ortho Biotech Products, LP; Ortho-McNeil Pharmaceutical, Inc.; Novartis Pharmaceuticals Corporation; Pfizer Inc.; Pharmacia Corporation; and TAP Pharmaceutical Products, Inc.  In total, Illinois has settled inflated AWP claims against more than four dozen manufacturers (see, e.g., January 2019 settlement with TEVA Pharmaceuticals), recovering $678 million in total.  IL AG  

October 25, 2019

Two foundations that provide pharmaceutical co-payment assistance to patients have reached agreements to resolve claims that they failed to operate independently of their pharmaceutical company donors and violated or caused the violation of the False Claims Act and Anti-Kickback Statute by working with those companies to ensure that donations received from them would be used to cover co-payments for the donor's drugs, inducing patients to purchase the drugs.  The Chronic Disease Fund, Inc. will pay $2 million, and the Patient Access Network Foundation will pay $4 million, amounts that were arrived at based on the entities' abilities to pay.  CDF was alleged to have conspired with Novartis, Dendreon, Astellas, Onyx, and Questcor.  PANF was alleged to have conspired with Bayer, Astellas, Dendreon, and Amgen.  The foundations also entered into 3-year corporate integrity agreements.  USAO MA

September 27, 2019

Pharmaceutical manufacturer Mylan N.V. has agreed to pay $30 million to resolve SEC charges that the company failed to disclose or adequately accrue for possible losses arising from a DOJ investigation into Mylan's classification, pricing, and rebate practices regarding its EpiPen product.  In 2017, Mylan agreed to pay $465 million to resolve that DOJ investigation.  SEC

September 26, 2019

Pharmaceutical manufacturer Avanir Pharmaceuticals will pay approximately $116 million to resolve civil and criminal charges related to its marketing of Nuedextra for off-label purposes and payment of kickbacks to prescribers and others.  The government alleged that Avanir marketed Nuedextra to long-term care facilities, suggesting that it could be used as an alternative to anti-psychotics for dementia patients, even though Nuedextra had only been approved by the FDA for treatment of particular symptoms secondary to a neurologic disease or brain injury.  In addition, Avanir provided certain physicians and other healthcare professionals with unlawful remuneration in the form of money, honoraria, travel, and food to induce them to write prescriptions for Nuedexta. The civil settlement for $103 million, which includes a five-year corporate integrity agreement, resolves whistleblower actions brought under federal and state False Claims Acts by former Avanir employees Kevin Manieri, Duane Arnold, and Mark Shipman.  Manieri will receive $12.4 million, and Arnold and Shipman will receive $5.4 million. In addition to the civil settlement, Avanir will pay a criminal penalty of $7.8 million, forfeit $5.1 million, and enter into a deferred prosecution agreement admitting to payment of kickbacks and requiring cooperation in ongoing in ongoing criminal investigations of individuals involved in marketing and prescribing Nuedextra.  Indictments against four individuals, including former Avanir employees and one of the top prescribers of Nuedexta in the country, were announced, charging the individuals with conspiracy to solicit, receive, offer and pay health care kickbacks.  DOJ