Feds Settle Pharmaceutical Case For $38M

The U.S. Justice Department has settled a case with a pharmaceutical company accused of paying doctors for what officials say were improper speaking fees. The settlement resolves allegations filed in Milwaukee federal court by a whistleblower.

A former pharmaceutical sales rep at Forest Laboratories LLC, located in New York, will get $7.8 million as part of the settlement. Nola Hitchcock Cross is the attorney for the whistleblower, Kurt Kroening.

“The allegations are that the company was essentially paying doctors related to the amount of their prescriptions under the guise of paying them for speaking, which is normally referred to in the health care fraud arena as ‘pay to play,’” Cross said.

Forest Labs denies any wrongdoing in the settlement announced Dec. 15. The total settlement is $38 million, most of which will go to the federal government with the rest going to state Medicaid programs.

Cross said speaking fees ranged from $500-2,500. The DOJ said the payments and meals were improper because doctors got paid even when the speaking engagements were not held and no licensed health professionals attended the programs. The speaker programs held between Jan. 1, 2008-Dec. 31 2011 involved three drugs: Bystolic, a blood pressure medicine; Savella, used for fibromyalgia; and Namenda , to treat dementia.

Cross said billions of dollars are recovered under the False Claims Act, which is how this case was brought.

“And we see that this is for the most part a bipartisan effort. Republican Sen. (Charles) Grassley is a big champion of whistleblower statutes,” she said. “This is normally called the Lincoln Law because it was enacted after fraudulent vendors sold things like uniforms that fell apart in the rain during the Civil War to the Union Army that kind of thing. So (President Abraham) Lincoln spearheaded the idea of whistleblower who can bring fraud to light.”

Cross said a provision in the Affordable Care Act called the sunshine law makes it a little easier to track money pharmaceutical companies pay to doctors for speaking fees.

“That’s quite new and enables government to kind of see trends in fraud more than they used to,” she said. “In addition to that, kind of on the flip side, pharmaceutical companies are now able to get more prescription information about physicians from various pharmacies.”

The DOJ declined to comment beyond what was in the press release.