Pharma Fraud

July 5, 2019

A New York doctor is the latest defendant in a widespread OK Compounding pharmacy fraud scheme to settle with the government.  From 2014 to 2015, Dr. George Lehner allegedly prescribed compounded pain creams for his Medicare patients in exchange for an hourly “medical director fee” by OK Compounding LLC.  To settle the case against him, Lehner will pay about $130,000.  USAO NDOK

July 2, 2019

For allegedly violating the False Claims Act, mental health nonprofit Wisconsin Community Services, Inc. (WCS) has agreed to pay $537,904 to the United States and the State of Wisconsin.  WCS voluntarily disclosed that one of its pharmacists had billed Medicare and Medicaid for brand name medications over several years, even though generic medications had been dispensed.  USAO EDWI

July 2, 2019

Dean Volkes, the owner and former CEO of Long Island-based reverse pharmaceutical distributor Guaranteed Returns, and Donna Fallon, the former CFO, have been sentenced to five years in prison and one year in prison, respectively, for their roles in the company's theft of customer property.  Guaranteed Returns managed pharmaceutical returns for its customers including hospitals, pharmacies, long-term care facilities, and Dept. of Defense facilities, when those customers sought to return expired or other drugs to manufacturers for a refund; customers paid a fee to Guaranteed Returns for managing this process.  While Guaranteed Returns told customers that it would hold their "indate" (not yet expired) drugs and return them to the manufacturers for refund after they expired, in fact, the individual defendants and the company returned the drugs to manufacturers and kept the full value of the returned products, diverting refunds into company internal accounts.  Evidence at trial established that the company stole more than $100 million from over 13,000 clients.  In addition to their prison sentences, defendants were ordered to forfeit proceeds and pay restitution in excess of $200 million in total.  USAO EDPA

June 5, 2019

Opioid manufacturer Insys Therapeutics will pay $225 million to resolve federal criminal and civil claims against it regarding the unlawful marketing of its drug Subsys, including the payment of kickbacks to providers through sham "speaker programs" that rewarded practitioners who increased their Subsys prescribing, as well as jobs for prescribers' relatives and friends, and lavish meals and entertainment.  $195 million of the settlement will be paid to resolve False Claim Act allegations in five separate whistleblower lawsuits in which the government intervened in 2018; the whistleblower reward shares have not yet been determined.  To resolve the criminal claims, Insys will pay $2 million and forfeit $28 million; its operating subsidiary will plead guilty to wire fraud and related charges.  In addition, Insys entered into a five-year Corporate Integrity Agreement and a five-year deferred prosecution agreement. Previously, five former Insys executives were convicted of racketeering in connection with Subsys marketing.  DOJ; USAO Mass

May 31, 2019

Generic drug maker Heritage Pharmaceuticals, Inc. has entered into a deferred prosecution agreement for criminal antitrust charges, admitting that it conspired to fix prices, rig bids, and allocate customers for the diabetes drug glyburide.  Heritage will pay a $225,000 criminal penalty and has agreed to cooperate in ongoing antitrust investigations.  In addition, Heritage will pay $7.1 million to resolve allegations under the False Claims Act that the company paid and received unlawful remuneration under the Anti-Kickback Statute through its arrangements with other generic drug makers regarding prices, supply, and allocation of customers for drugs including glyburide, hydralazine, and theophylline.  DOJ; USAO ED Pa

May 29, 2019

Almirall, LLC, f/k/a Aqua Pharmaceuticals, LLC , will pay $3.5 million to settle kickback allegations exposed by a former Aqua sales representative.  According to the whistleblower, the pharmaceutical company paid kickbacks in the form of free meals, trips, gift cards, and gifts, to dermatology providers in exchange for prescriptions of their drugs to Medicare and TRICARE patients.  It also paid kickbacks by compensating healthcare providers for speaking engagements and consulting services. For coming forward with details of the fraud, the unnamed whistleblower will receive a $735,000 share of the recovery.  USAO EDPA

May 29, 2019

A doctor in South Carolina has agreed to pay $92,506.30 to settle allegations of accepting illegal payments from OK Compounding, LLC, in exchange for prescribing their pain creams to TRICARE patients.  The False Claims Act violations allegedly occurred between February and May 2013, and involved “medical director fees” paid to Dr. Jerry Back that were in reality, kickbacks.  This was the eighth kickback settlement in the Northern District of Oklahoma since the beginning of the year.  USAO NDOK