On August 8, 2018, AstraZeneca agreed to pay $110 million to the state of Texas to settle allegations that it promoted two of its drugs without FDA approval resulting in health risks to children, adolescents, and other state hospital patients. This case was brought by two whistleblowers under the qui tam provisions of Texas’s Medicaid Fraud Prevention Act. The whistleblowers, two former AstraZeneca employees, among them a sales representative, first reported the nationwide scheme eight years ago after several New York patients died taking Seroquel, a powerful antipsychotic medication, along with methadone. The whistleblowers claimed that the pharmaceutical giant aggressively marketed the drug to methadone clinics despite knowing about the dangers of the drug combination. Seroquel was also the subject of a prior federal lawsuit that culminated in a $520 million settlement and “corporate integrity agreement” in 2010. The agreement prohibited AstraZeneca from paying illegal kickbacks to providers to promote the antipsychotic in children without FDA approval.
Tuesday’s settlement resolved claims that AstraZeneca had violated the 2010 federal agreement by continuing to misrepresent and conceal information about Seroquel’s safety and effectiveness to Texas Medicaid providers and by continuing to promote the antipsychotic for non-FDA approved uses, a practice commonly known as off-label marketing. Specifically, the Texas attorney general’s office alleged that the pharmaceutical giant paid hundreds of thousands of dollars in kickbacks to providers to encourage the prescription of Seroquel, exposing children and other vulnerable patients to significant harm. The suit further claimed that the pharmaceutical company targeted Texas Medicaid providers as part of another off-label marketing scheme for Crestor, a cholesterol-lowering drug, downplaying the higher risk of diabetes associated with its use for certain patients.
AstraZeneca agreed to pay $90 million to settle the Seroquel claims and $20 million for the allegations concerning Crestor. The relator share has not yet been determined. AstraZeneca previously settled charges of other federal and state Medicaid fraud schemes in 2015. Texas Attorney General Ken Paxton characterized the allegations in this latest settlement as “especially disturbing because the well-being of children and the integrity of the state hospital system were jeopardized.” See Texas AG Press Release.
This case is one of numerous state and federal qui tam lawsuits against AstraZeneca in recent years and illustrates how whistleblower provisions continue to be powerful tools for protecting vulnerable populations against healthcare fraud abuses. Uncovering Medicaid fraud and fraud in other government healthcare programs is a priority for state and federal authorities, and whistleblowers play an essential role in their enforcement efforts. Common types of healthcare fraud also include upcoding, rebate fraud, and “unbundling” services to increase reimbursement. To learn more about other kinds of healthcare fraud, please click here.
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