Pharmaceutical Fraud

A settlement has been reached in a whistleblower class action lawsuit brought against Abbott Laboratories Inc., B. Braun Medical Inc. and Roxane Laboratories Inc. n/k/a Boehringer Ingelheim Roxane Inc. They are accused of that engaging in a scheme to report false and inflated prices for numerous pharmaceutical products.

The whistleblowers will receive approximately $88.4 million.

This whistleblower case stemmed from numerous cases filed against these pharmaceutical companies, one case goes all the way back to 1997.  The United States allged that Abbott, Roxane and Braun created artificially inflated spreads to market, promote and sell the drugs to existing and potential customers.  Because payment from the Medicare and Medicaid programs was based on the false inflated prices, the government alleged that the defendants caused false claims to be submitted to federal healthcare programs, and as a result, the government paid millions of claims for far greater amounts than it would have if Abbott, B. Braun and Roxane had reported truthful prices. 

The difference between the resulting inflated government payments and the actual price paid by healthcare providers for a drug is referred to as the “spread.”  The larger the spread on a drug, the larger the profit for the health care provider or pharmacist who gets reimbursed by the government.

A settlement has been reached in a whistleblower class action lawsuit brought against Eon Labs Inc who is accused of submitting false quarterly reports to the government. 

The settlement resolves allegations against Eon in a multi-defendant whistleblower action. The whistleblower will receive approximately $525,000 in relation to this particular settlement.

The originally filed lawsuit originated in 2002.  The United States alleged that, from April 1999, and continuing through September 2008, Eon submitted false quarterly reports to the government that misrepresented Nitroglycerin SR's regulatory status and failed to advise that Nitroglycerin SR no longer qualified for Medicaid coverage. As a result, the government contends, Eon knowingly caused false Medicaid claims to be submitted for Nitroglycerin SR.

In April 1999, the Food & Drug Administration (FDA) determined that Nitroglycerin SR lacked substantial evidence of effectiveness and published a notice proposing to withdraw approval of the product. The government contends that, after the FDA notice, Nitroglycerin SR no longer was legally eligible for reimbursement by government health care programs such as Medicaid.

A settlement has been reached in a whistleblower class action lawsuit brought against Atlanta-based Mariner Health Care Inc. and SavaSeniorCare Administrative Services LLC, as well as their principals, Leonard Grunstein, Murray Forman and Rubin Schron. They are accused of soliciting kickback payments from Omnicare in exchange for agreements to continue using Omnicare.

$7.84 million of the settlement proceeds will go to the United States, while $6.16 million has been allocated to certain state Medicaid programs. The whistleblower's recovery was not disclosed.

The case was originally filed in 2006.  The United States alleged the defendants conspired to arrange for Omnicare to pay Mariner and Sava $50 million in exchange for the right to continue providing pharmacy services to the nursing homes, which together constituted one of Omnicare’s largest customers. The parties allegedly attempted to disguise the $50 million kickback as a payment to acquire a small Mariner business unit that had only two employees and was worth far less than $50 million. According to the complaint, Omnicare paid $40 million of this amount prior to actually acquiring the Mariner business unit and, at the same time, Omnicare obtained new 15-year pharmacy contracts from Mariner and from Sava, a new nursing home chain that Grunstein and Forman created from the Mariner chain. The complaint alleged that Grunstein and Forman illegally tied the new pharmacy contracts to Omnicare’s agreement to purchase the small Mariner business unit, and that the total $50 million purchase price for the business unit actually was a kickback by Omnicare to keep the future business of Mariner and Sava.

The government’s complaint further alleged that, in 2006, after the government issued subpoenas concerning the transaction, the individual defendants created backdated documents in a further attempt to hide the kickback.

A settlement has been reached in a whistleblower class action lawsuit brought against Mylan Pharmaceuticals, UDL Laboratories, AstraZeneca Pharmaceuticals and Ortho McNeil Pharmaceutical.  They are accused of failing to pay appropriate rebates to state Medicaid programs for drugs paid for by those programs.

Mylan and UDL agreed to pay $118 million to resolve allegations that they underpaid their rebate obligations with respect to several Mylan drugs (nifedipine extended release tablets, flecainide acetate, selegiline HCL, Orphenadrine Citrate Aspirin and Caffeine tablets, Triamterene/Hydrochlorothiazide, Propoxyphene HCL, Propoxyphene HCL/Aspirin/Caffeine, Prophyxphene Napsylate/Acetaminophen, Ibuprofen tablets, Bumetanide, Cephalexin and Cefactor) and several UDL drugs (nifedipine extended release tablets, selegiline HCL, Triamterene & HCTZ, Propox Naps & APAP, Flecainide Acetate, Trihexyphenidyl, Ranitidine HCL syrup, Sucralfate Suspension, Selegiline HCL and Bumetanide). Because the Medicaid program is funded by both the federal and state governments, the federal government received $60,896,476.00, the states $49,824,389.00 of the settlement amount and $7,279,135.00 will be paid to entities that participated in the Public Health Service’s Drug Pricing Program.

Separately, AstraZeneca paid $2.6 million ($1.43 million to the federal government and $1.17 million to the states) to resolve allegations that it underpaid its rebate obligations with respect to Albuterol. Ortho McNeil paid $3.4 million ($1.87 million to the federal government and $1.53 million to the states) to resolve allegations that it underpaid its rebate obligations with respect to Dermatop.

The whistleblower will receive a $10,787,392 share of the total recovery.

Filed in 2010, the United States alleged that all four companies had sold innovator drugs that were manufactured by other companies and had classified those drugs as non-innovator drugs for Medicaid rebate purposes. As a result of the improper classification of these drugs, the companies underpaid their rebate obligations under the Medicaid Rebate Program. The Medicaid Prescription Drug Rebate Program was enacted by Congress in 1990 out of concern for the costs the Medicaid was paying for outpatient drugs. By agreeing to participate in the Medicaid Rebate Program and signing these rebate agreements, the four companies agreed to pay quarterly rebates to Medicaid that were based upon the amount of money that health care program paid for each company’s drugs. The precise amount of a rebate is determined in part by whether a drug is considered an "innovator" drug or a "non-innovator" drug. The rebate that must be paid for innovator drugs is higher than the rebate for non-innovator drugs.

A $762 Million settlement has been reached with Amgen Inc to resolve criminal and civil liability arising from its sale and promotion of certain drugs and illegally introducing a misbranded drug into interstate commerce.

Under the terms of the criminal plea agreement, Amgen will pay a criminal fine of $136 million and criminal forfeiture in the amount of $14 million. As part of the civil settlement, Amgen has agreed to pay $612 million ($587.2 million to the United States and $24.8 million to the states). There have been several whistleblower lawsuits filed against Amgen Inc making the whistleblower's share amounts currently undeterminable.

The federal civil settlement agreement encompasses allegations that Amgen: (1) promoted Aranesp and two other drugs that it manufactured, Enbrel and Neulasta, for off-label uses and doses that were not approved by the FDA and not properly reimbursable by federal insurance programs; (2) offered illegal kickbacks to a wide range of entities in an effort to influence health care providers to select its products for use, regardless of whether they were reimbursable by federal health care programs or were medically necessary; and  (3) engaged in false price reporting practices involving several of its drugs.  As part of the global settlement, Amgen has also agreed to enter into a Corporate Integrity Agreement (CIA) with HHS-OIG that will govern its conduct, and ensure careful oversight of its branding and marketing practices.

A settlement has been reached in a whistleblower class action lawsuit brought against Sanofi-Aventis U.S. Inc. and Sanofi-Aventis U.S. LLC (Sanofi US).  They are accused of giving physicians free units of Hyalgan, a knee injection, in violation of the Anti-Kickback Statute, to induce them to purchase and prescribe the product and submitting false average sales price (ASP) reports for Hyalgan that failed to account for free units distributed contingent on Hyalgan purchases. 

The whistleblower will receive a $18.5 million share of the government’s recovery.

The whistleblower case was originally filed in 2010.  The government's allegations were that Sanofi US  provided its sales representatives with thousands of free “sample” Hyalgan units and trained its sales representatives to market the “value add” of these units to physicians. In practice, the United States alleges, Sanofi US sales representatives often entered into illegal sampling arrangements with physicians, using the free units as kickbacks and promising to provide negotiated numbers of them in order to lower Hyalgan’s effective price. The government contends that there were numerous such arrangements, including:

• A Southern California-based Sanofi US sales representative who allegedly provided 25 Hyalgan samples to a physician practice for every 100 Hyalgan units purchased, and who supplemented these kickbacks by regularly treating the entire practice to lavish dinners at Sanofi US’s expense and with Sanofi US’s approval.
• A New York-based Sanofi US sales representative who allegedly provided 12 Hyalgan samples to a physician practice for every 50 Hyalgan units purchased, and whose manager supplemented these kickbacks by treating the practice, along with friends and family members, to a lavish dinner in Manhattan at Sanofi US’s expense and with Sanofi US’s approval.
• A Central Texas-based Sanofi US sales representative who allegedly promised a physician practice 125 free Hyalgan syringes in exchange for a purchase of 500 Hyalgan units and was lauded by Sanofi US’s Texas sales team for “[u]tiliz[ing] samples to provide value for the office.”

The United States contends that price was important to physicians because Hyalgan and its direct competitor were reimbursed at the same, fixed rate by Medicare and other insurers. Thus, the less expensive option afforded a greater reimbursement “spread,” or profit, to physicians’ practices. According to the government’s allegations, Sanofi US chose not to compete by lowering the actual invoiced price of Hyalgan, for fear of setting off a price war with its competitor that would lead to a “downward spiral” in prices and reimbursements. Instead, the government alleges, Sanofi US surreptitiously lowered the effective price of Hyalgan by promising the free units to doctors who agreed to purchase the product. The government alleges that Medicare and other federal health care programs paid millions of dollars in kickback-tainted claims for Hyalgan.

A settlement has been reached in a whistleblower class action lawsuit brought against Victory Pharma Inc who is accused of paying kickbacks to doctors to induce them to write prescriptions for Naprelan, Xodol, Fexmid and Dolgic, for patients covered by Medicare and other federal health insurance programs.

The whistleblower will receive $1.7 million of the government's recovery.

The government's complaint was filed in 2012 stemming from an earlier filed suit filed by the whistleblower.  The United States alleged that Victory engaged in a scheme to promote its drugs by paying kickbacks to doctors to induce them to write prescriptions for Victory’s products, including prescriptions for patients covered by Medicare and other federal health insurance programs. The kickbacks included tickets to professional and collegiate sporting events; tickets to concerts and plays; spa outings; golf and ski outings; dinners at expensive restaurants; and numerous other out-of-office events. Victory also encouraged its sales representatives to schedule paid “preceptorships,” which involved sales representatives “shadowing” doctors in their offices. The settlement also resolves allegations that Victory improperly used these preceptorships to induce doctors to prescribe Victory’s products.

A settlement has been reached in a whistleblower class action lawsuit brought against Par Pharmaceutical Companies Inc who is accused of promotion of its prescription drug Megace ES for uses not approved as safe and effective by the Food and Drug Administration (FDA) and not covered by federal health care programs.

A federal court judge fined Par $18 million and ordered $4.5 million in criminal forfeiture. Par also agreed to pay $22.5 million to resolve its civil liability. Although the settlement reached in this lawsuit was based upon three filed whistleblower cases, the only disclosed whistleblower recovery was paid to the two whistleblowers that filed the intial case in 2009.  They  will receive $4.4 million of the federal recovery.

The United Staes civil allegations were that Par, by promoting the sale and use of Megace ES for uses that were not FDA-approved and not covered by Federal health care programs, caused false claims to be submitted to these programs. The United States further alleged that Par deliberately and improperly targeted sales to elderly nursing home residents with weight loss, whether or not such patients suffered from AIDS, and launched a long-term care sales force to market to this population. During this marketing campaign, Par was allegedly aware of adverse side effects associated with the use of megestrol acetate in elderly patients, including an increased risk of deep vein thrombosis, toxic reactions in elderly patients with impaired renal function, and mortality. The United States alleged that Par made unsubstantiated and misleading representations about the superiority of Megace ES over generic megestrol acetate for elderly patients to encourage providers to switch patients from generic megestrol acetate to MegaceES, despite having conducted no well-controlled studies to support a claim of greater efficacy for Megace ES. Except as admitted in the plea agreement, the claims settled by the civil settlement agreement are allegations only, and there has been no determination of liability as to those claims.

A settlement has been reached in a whistleblower class action lawsuit brought against Ranbaxy USA Inc. , a subsidiary of Indian generic pharmaceutical manufacturer Ranbaxy Laboratories Limited, who is accused of causing false claims to be submitted to government health care programs.

Ranbaxy plead guilty to felony charges relating to the manufacture and distribution of certain adulterated drugs made at two of Ranbaxy’s manufacturing facilities in India. Ranbaxy also agreed to pay a criminal fine and forfeiture totaling $150 million and to settle civil claims under the False Claims Act and related State laws for $350 million. The federal government’s share of the civil settlement amount is approximately $231.8 million, and the remaining $118.2 million will go to the states participating in the agreement. The whistleblower will receive approximately $48.6 million from the federal share of the settlement amount.

The government's complaint stemmed from a whistleblower lawsuit that was filed in April 2007.  The government alleged that between April 1, 2003, and September 16, 2010, Ranbaxy manufactured, distributed, and sold drugs whose strength, purity, or quality differed from the drug’s specifications or that were not manufactured according to the FDA-approved formulation. The United States further contends that, as a result, Ranbaxy knowingly caused false claims for those drugs to be submitted to Medicaid, Medicare, TRICARE, the Federal Employees Health Benefits Program, the Department of Veterans Affairs, and the U.S. Agency for International Development (USAID), which administers the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR).

A settlement has been reached in a whistleblower class action lawsuit brought against CR Bard Inc who is accused of knowingly caused false claims to be submitted to the Medicare program for brachytherapy seeds used to treat prostate cancer.

The whistleblower will receive $10,134,600 as her share of the civil settlement. In addition, according to a non-prosecution agreement with the United States, Bard has agreed to pay an additional $2.2 million and to take numerous remedial steps, many of which the company identified and began to implement prior to the criminal investigation, to enhance its corporate compliance program to prevent similar illegal actions in the future.

The whistleblower case was filed January 2006.  The government's claims were that, from 1998 to 2006, Bard provided illegal remuneration to customers and physicians to induce them to purchase Bard’s seeds, in violation of the Anti-Kickback Statute.   The illegal remuneration allegedly took the form of certain grants, guaranteed minimum rebates, conference fees, marketing assistance and/or free medical equipment that Bard paid to customers and/or physicians who used the seeds to perform treatment for prostate cancer.   Hospitals ultimately submitted bills to Medicare for these seeds, which the government alleged were rendered false by Bard’s illegal kickback activity. The government alleged that Bard was liable under the False Claims Act for causing the submission of those false claims.