Pharma Fraud

January 18, 2017

New York announced a joint settlement with four other states and the Federal Trade Commission with Mallinckrodt plc and its U.S. subsidiary, formerly known as Questcor Pharmaceuticals (“Questcor”), a drug manufacturer. The complaint and settlement, filed jointly, alleges that Questcor unlawfully acted to prevent competition for its drug H.P. Acthar Gel, which is typically used as a last resort to treat certain life-threatening diseases, including infantile spasms and multiple sclerosis. In 2001, Questcor bought the rights to Acthar, known as an adrenocorticotropic hormone (ACTH)-based therapeutic drug, which are used to treat certain life-threatening diseases, and is the standard of care for infantile spasms. It is the only such drug sold in the United States. Since then, Questcor has increased the price of Acthar 85,000%, from $40 per vial to over $34,000 per vial. The complaint alleges that Questcor monopolized the market for ACTH drugs by purchasing the rights to Synacthen, which was being sold by Novartis Pharma A.G. in 2012. Synacthen is used to treat patients with the same life-threatening conditions as Acthar, but is sold in Europe and Canada at a fraction of the price. NY, TX

January 12, 2017

Baxter International Inc. subsidiary Baxter Healthcare Corporation agreed to pay roughly $18 million to settle charges of violating the False Claims Act arising from the company's failure to follow current Good Manufacturing Practices when manufacturing sterile drug products in North Carolina. Baxter admitted that it distributed products in interstate commerce that were adulterated in violation of the Federal Food, Drug, and Cosmetic Act FDCA. It will pay a total of $16 million in monetary penalties and forfeiture. It will also pay roughly $2 million to resolve allegations it violated the False Claims Act by submitting false claims to the Department of Veterans Affairs based upon Baxter’s failure to follow cGMPs. The allegations originated in a whistleblower lawsuit under the qui tam provisions of the False Claims Act by Baxter employee Christopher Wall. He will receive a whistleblower award of roughly $432,000 from the proceeds of the government's False Claims Act recovery. DOJ

January 11, 2017

Ireland-based Shire Pharmaceuticals LLC and certain subsidiaries agreed to pay $350 million to settle charges that Shire and the company it acquired in 2011, Advanced BioHealing violated the False Claims Act and Anti-Kickback Statute by using kickbacks and other unlawful methods to induce clinics and physicians to use or overuse their “Dermagraft” skin product. It is the largest False Claims Act recovery in a kickback case involving a medical device, and resolves claims brought by the federal government along with 37 states and the District of Columbia. The States will receive $6,104,000 for the State share of the Medicaid program. According to the government, Dermagraft salespersons unlawfully induced clinics and physicians with lavish dinners, drinks, entertainment and travel; medical equipment and supplies; unwarranted payments for purported speaking engagements and bogus case studies; and cash, credits and rebates. The allegations originated in six lawsuits filed brought by whistleblowers in, or transferred to, the United States District Court for the Middle District of Florida. Two of the qui tam actions named New York and other states and included allegations that Shire submitted or caused to be submitted false claims to the Medicaid program under federal and state False Claims Acts. The whistleblowers will receive a yet-to-be-determined whistleblower award from the proceeds of the government recovery. Whistleblower Insider, NY, FL

December 22, 2016

Teva Pharmaceutical Industries Limited will pay more than $519 million to settle civil and criminal charges that it violated the Foreign Corrupt Practices Act by paying bribes to foreign government officials in Russia, Ukraine, and Mexico.  The SEC’s complaint alleges that Teva made more than $214 million in illicit profits by making the influential payments to increase its market share and obtain regulatory and formulary approvals as well as favorable drug purchase and prescription decisions.  SEC

December 15, 2016

New York City-based Forest Laboratories LLC and its subsidiary Forest Pharmaceuticals Inc. agreed to pay $38 million to resolve allegations they violated the False Claims Act and Anti-Kickback Statute by paying kickbacks to induce physicians to prescribe the drugs Bystolic, Savella and Namenda.  According to the government, Forest provided payments and meals to certain physicians in connection with speaker programs about the drugs as improper inducements to prescribe them.  The allegations originated in a whistleblower lawsuit filed by former Forest employee Kurt Kroening under the qui tam provisions of the False Claims Act.  He will receive a whistleblower award of approximately $7.8 million from the proceeds of the government’s recovery.  Whistleblower Insider

November 15, 2016

Florida pharmacies Lemon Bay Drugs North, Inc. and Brooksville Drugs, Inc. agreed to pay a total of $750,000 to resolve allegations that the pharmacies violated the False Claims Act by causing claims to be submitted to federal health care programs for prescription drugs that were never dispensed.  According to the government, the pharmacies provided Medicare and Medicaid patients generic versions of certain medications, but charged Medicare and Medicaid for the brand name versions of those medications.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by a former pharmacy technician who worked at Lemon Bay Drugs.  She will receive a whistleblower award of $142,500 from the proceeds of the government's recovery.  DOJ (MDFL)

December 15, 2016

Ohio joined 19 other state attorneys general in filing a federal lawsuit against Heritage Pharmaceuticals and several other generic drug makers accused of conspiring to reduce competition and inflate prices in the United States for two drugs: doxycycline hyclate delayed-release (an antibiotic) and glyburide (a diabetes medication). The lawsuit names as defendants Heritage Pharmaceuticals Inc., Aurobindo Pharma USA Inc., Citron Pharma LLC, Mayne Pharma (USA) Inc., Mylan Pharmaceuticals Inc., and Teva Pharmaceuticals USA Inc. The states allege that Heritage Pharmaceuticals, through senior executives and salespeople, organized and initiated a wide-ranging series of conspiracies with other companies to allocate markets, artificially inflate and manipulate prices, and otherwise thwart competition. According to the complaint, the defendants routinely coordinated their schemes by interacting directly with competitors at events, such as industry trade shows and customer conferences, and through direct email, phone, and text message communications. OH

December 8, 2016

New York and 41 other states announced a $19.5 million multistate agreement with Bristol-Myers Squibb (“BMS”) arising from alleged improper marketing and promotion of the drug Abilify. Abilify is one of several second-generation antipsychotic prescription drugs, commonly referred to as “atypical antipsychotics,” that were originally used to treat schizophrenia. New York alleged that BMS improperly promoted Abilify for pediatric use and for use in elderly patients with symptoms consistent with dementia and Alzheimer’s disease. In fact, in 2006, Abilify received a “black box” warning stating that elderly patients with dementia-related psychosis who are treated with antipsychotic drugs have an increased risk of death. The complaint further alleged that BMS violated state consumer protection laws by misrepresenting and minimizing risks of the drug including metabolic and weight gain side effects and by misrepresenting the findings of scientific studies. NY, GA

October 17, 2016

Ohio-based nursing home pharmacy Omnicare, Inc. agreed to pay roughly $28 million to resolve charges of violating the False Claims Act by soliciting and receiving kickbacks from pharmaceutical manufacturer Abbott Laboratories in exchange for promoting the prescription drug, Depakote, for nursing home patients.  The settlement follows the May 2012 settlement under which Abbott agreed to pay $1.5 billion to resolve Abbott’s liability under the False Claims Act for, among other things, alleged kickbacks to nursing home pharmacies, including Omnicare and PharMerica Corp.  In October 2015, PharMerica agreed to pay $9.25 million to settle its role in the alleged scheme.  The allegations underlying this settlement as well as the prior Abbott and PharMerica settlements originated in two whistleblower lawsuits filed by former Abbott employees Richard Spetter and Meredith McCoyd under the qui tam provisions of the False Claims Act.  Ms. McCoyd will receive a whistleblower award of $3 million from the proceeds of this settlement.  Whistleblower Insider

July 18, 2016

Bristol-Myers Squibb agreed to a $30 million settlement to resolve allegations of unlawful kickbacks to physicians in the marketing of Pravachol and other drugs.  The claims were made in a whistleblower suit filed under the California Insurance Frauds Prevention Act by three former Bristol-Myers sales representatives, who will receive a share of the settlement.  CA