Daiichi Sankyo to Pay $39 Million to Settle Unlawful Kickback Claims

The False Claims Act contains certain restrictions pertaining to kickbacks offered to physicians treating patients enrolled in government healthcare programs, including Medicare and Medicaid. The anti-kickback provisions prohibit any doctor from receiving – or any pharmaceutical company from offering – incentives or benefits in exchange for the provider’s agreement to exclusively use the company’s prescription medications or medical devices. Anti-kickback measures are also implemented in order to eliminate kickbacks between doctors and specialized healthcare centers, including diagnostic imaging or renal dialysis facilities.

At the heart of the anti-kickback laws is the notion that doctors should be freely providing advice to patients, without the discoloration of financial incentives clouding the provider’s judgment. Moreover, patients should be able to rely on the advice of their doctor as both uniquely suited to the patient’s specific condition and offered in the patient’s best interests.

In today’s case, we look at a recent settlement between global pharmaceutical company Daiichi Sankyo – with headquarters in the New Jersey area – and the federal government, following allegations of unlawful kickbacks to physicians. This, in exchange for offering its drugs to Medicare and Medicaid patients in exchange for lucrative cash incentives.

Details of the Case Against Daiichi Sankyo

Among many other drugs, Daiichi Sankyo manufactures the popular drugs known as Azor, Benicar, Tribenzor, and Welchol. According to allegations, the company engaged physicians to participate in “Physician Organization and Discussion” programs, which were (on paper) meant to elicit lectures and speeches from highly-regarded medical providers familiar with the impact of these drugs. In reality, however, the programs took place at lavish restaurants wherein physicians offered superficial and duplicative speeches about the drugs.

Moreover, allegations reveal that despite Daiichi Sankyo’s reported cost per attendee of $140.00, the cost to host each physician and guests attending these programs far exceeded this amount – prompting an investigation into the propriety of Daiichi Sankyo’s business models.

In addition to the sham dinners, physicians were also offered cash incentives for organizing a POD program that, in reality, took place in the doctor’s own office and included only the office staff members.

In addition to the $39 million settlement, Daiichi Sankyo has also agreed to enter into a $5 million corporate integrity agreement. The terms of the agreement mandate that Daiichi Sankyo must make a major overhaul in its compliance department and must show marked improvement in this area within the next five years.

The case was first brought to light by a courageous whistleblower and former employee of the company. The whistleblower, who worked as a pharmaceutical sales representative, alleged that for a period spanning from January 2004 through February 2011, the company engaged in costly and wasteful kickback schemes in order to boost sales of its popular drugs. In exchange for her exposure of the scheme, the whistleblower is set to receive $6.1 million.

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