In 2014, the U.S. Department of Justice settled a major kickback case involving the pharmaceutical giant Teva Pharmaceuticals. As you may recall, Teva Pharmaceuticals was alleged to have offered lucrative kickbacks in the form of “consulting fees,” vacations, and other incentives to psychiatrists and treating physicians in exchange for their agreement to prescribe the powerful antipsychotic drug clozapine to elderly patients.
Considered by many to be a drug of last resort, clozapine is approved for use in those suffering from schizophrenia who do not respond to other treatment options. However, according to the details of the 2014 settlement, Teva was encouraging practitioners to prescribe the drug to elderly patients suffering from the behavioral effects of advanced-stage dementia. The drug carries extremely risky side effects, particularly for elderly patients, including inflammation of the heart muscle, dangerous decreases in white blood cell counts, and increased morbidity.
As a result of the case against TEVA and its subsidiary IVAX, the company agreed to pay $15.5 million to the federal government and $12 million to the state of Illinois. The case against Illinois psychiatrist Dr. Michael J. Reinstein was litigated separately after Medicare and Medicaid authorities took notice that he was the prescribing the highest volume of clozapine in the United States. According to reports, Dr. Reinstein had prescribed the drug to more than half of his patients, and in one nursing home had 300 out of 400 residents taking the medication.
Details of the allegations against Dr. Reinstein and subsequent punishment
As an individual defendant, Dr. Reinstein was facing two parallel legal actions. The first involved federal criminal allegations of fraud due to his receipt of nearly $600,000 in benefits under Teva’s clozapine kickback scheme. More specifically, Dr. Reinstein was offered up to $50,000 per year in “consulting fees,” given significant contributions toward his pharmaceutical research endeavors, and paid handsomely for speaking engagements at which his nurse actually made the presentations. TEVA also provided fishing trips, exotic vacations, and dinners valued at $1,400 each.
The second action, which is civil in nature, involves Dr. Reinstein’s False Claims Act liability stemming from the same conduct, which resulted in a payment of $3.79 million to settle the allegations.
With regard to the criminal allegations against the doctor, he pled guilty in early February to the crimes and his sentence has not yet been set. Presumably, the doctor placed thousands of elderly patients at risk by prescribing this unnecessary and powerful drug for the treatment of dementia-related outbursts that could be easily controlled with less risky medications.
In keeping with its ongoing promise to identify and eliminate costly healthcare fraud, the Department of Justice commented on the individual settlement and guilty plea, stating:
“[We are] committed to ensuring that physicians who accept payments from pharmaceutical manufacturers to influence prescribing decisions are held accountable….Schemes such as this one undermine the health care system and take advantage of elderly patients who are among the most vulnerable health care recipients.”
Likewise, the U.S. Attorney’s Office for the Northern District of Illinois commented, stating:
“Physicians must prescribe medications for their patients solely on the basis of the patient’s best medical interests and not because those decisions were improperly influenced by kickbacks and other financial favors….”
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