Catch of the Week — Pharmaceutical Company Allegedly Bribed Doctors with Trips to the Kentucky Derby

A recent settlement between the Department of Justice and US WorldMeds (“USWM”), show how creative, and how luxurious, kickbacks allegedly paid to physicians can be. The company, a pharmaceutical manufacturer, agreed to pay $17.5M to resolve claims that it violated the False Claims Act by paying kickbacks to patients and doctors by boosting sales of two of their drugs, Apokyn (a drug used to treat Parkinson’s disease), and Myobloc (a drug used to assist in certain, high-risk pregnancies).

Broadly speaking, the Anti-Kickback statute prohibits healthcare providers, including pharmaceutical companies from paying or receiving kickbacks, remuneration, or anything of value to induce patients to purchase or use a company’s drugs. The law seeks to prevent physicians proscribing medically unnecessary medications, or recommending unneeded tests. The Anti-Kickback Statute is also intended to ensure that a physician’s medical judgment is not compromised by financial incentives and is solely based on the best interests of the patient.

The settlement resolves allegations centering around two basic schemes. The first involved alleged kickbacks paid to patients, in the form of co-pay waivers. Often, Medicare beneficiaries are required to pay a fee when they are proscribed medications. These fees are generally paid in the form of a co-payment of a deductible, and they are legally mandated. Drug makers reimbursing patients for these costs can run afoul of the Anti-Kickback Statute.

After USWM raised prices of Apokyn in 2012, many patients’ co-pays exceeded $5,000 a year. At the same time, USWM allegedly funded a third-party foundation that paid the co-pays of many patients with the goal of increasing the sales of Apokyn at the new, higher rate. USWM was the foundation’s only donor.

USWM allegedly also provided certain physicians with kickbacks that were meant to induce them into proscribing more Apokyn and Myobloc. The doctors were paid excessive consulting and speaking fees, but also bought lavish meals, private plane rides to Hawaii, and all-expenses paid trips for them and their spouses to the Kentucky Derby, where one doctor experienced the event from the USWM company box. Allegedly, this scheme was both large, long-running, and nationwide.

In addition to paying the $17.5M, USWM entered into a “corporate integrity agreement” with the government that will least five years. Under the terms of the agreement, the company will need to hire an outside, independent review organization to monitor its promotional activities and its interactions with third-party charities.

These alleged frauds were revealed in two different law suits by whistleblowers, a former USWM National Sales Director and a former USWM Senior Medical Director, who will receive an award of over $3M under the qui tam provisions of the False Claims Act. The Act allows private persons to file suit against certain entities that commit fraud against the government. If their suits are successful, whistleblowers are entitled to receive a monetary award of between 15 and 25 percent of the government’s recovery.

As these cases demonstrate, the vigilant and discerning eyes of doctors, nurses, administrative professionals, and pharmaceutical employees are essential in combating the increasing number of alleged frauds involving kickbacks, given that business relationships such as the one between USWM and physicians are often opaque and require the perspective of insiders.

READ MORE:

• Anti-Kickback Statute and Stark Law
• False Claims Act
• How Copayment Waivers can Give Rise to a Whistleblower Claim
• I Think I Have a Whistleblower Case
• Whistleblower FAQs

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