Following an intensive investigation into the practices of pharmaceutical giant Warner Chilcott U.S. Sales LLC, the company has agreed to settle criminal and civil allegations of healthcare fraud for $125 million as well as plead guilty to one felony count of healthcare fraud. In October 2015, the former president of the company, Carl Reichel, was arrested in a related matter pertaining to healthcare fraud and faces similar charges stemming from allegations of illegal kickbacks and other financial misdeeds.
At the crux of the government’s allegations are the contentions that the company engaged in widespread and pervasive kickback schemes.
Details of the allegations against Warner Chilcott
The case against Warner Chilcott was handled by the U.S. Attorney’s Office for the District of Massachusetts, an area home to a number of healthcare and pharmaceutical companies. According to the allegations, between 2009 and 2013, the company regularly offered financial remuneration to area doctors and practitioners in exchange for their agreement to prescribe Warner Chilcott drugs in place of other similar medications. Specifically, the majority of the claims involved the top-selling drugs Actonel, Asacol, Atelvia, Doryx, Enablex, Estrace, Loestrin, and various formulations of these drugs.[1. Loftus, Peter, “Former Executive at Allergan Unit Arrested on Kickback Charge,” Wall Street Journal, http://www.wsj.com/articles/allergan-unit-to-plead-guilty-to-fraud-pay-125-million-1446139657 (Retrieved Nov. 11, 2015).]
More specifically, Warner Chilcott is alleged to have arranged “Medical Education Events” in which doctors were paid handsomely to “educate” colleagues and other medical professionals as to the efficacy and use of the drugs listed above. However, upon further inspection, these events were nothing more than a sham operation to provide doctors with fancy meals, financial incentives, and trips to “conferences” wherein very little if any medical education took place.
In addition to claims involving illegal kickbacks, the company settled claims it unlawfully promoted certain drugs while minimizing the potential risks. Further, the company is alleged to have made “unsubstantiated superiority claims” with regard to its osteoporosis drug Actonel, which were not supported by reputable medical evidence.
Government targets illegal kickbacks
Illegal kickbacks are an ongoing problem within the healthcare field, prompting authorities to take a strong-arm approach when prosecuting these wasteful, costly, and potentially dangerous arrangements. In a statement by the FBI, “[P]harmaceutical companies and their employees have a significant responsibility to sell and market drugs in an ethical and legal manner….This settlement and the related indictments reflect the commitment of the FBI and our government partners to aggressively investigate companies and individuals who fail that responsibility and seek to profit from fraudulent activities.”
In a succinct message from the Department of Health and Human Services, “[P]lacing financial gain above the legitimate needs of patients is deplorable….Paying kickbacks and even providing instructions on how to defraud Medicare are practices that will not be tolerated.”
The Department of Justice added:
Doctors’ medical judgment should be based on what is best for the patient, and not clouded by expensive meals and other pharmaceutical company kickbacks….Pharmaceutical company executives and employees should not be involved with treatment decisions or submissions to a patient’s insurance company. Today’s enforcement actions demonstrate that the government will seek not only to hold companies accountable, but will identify and charge corporate officials responsible for the fraud.[2.United States Attorney’s’ Office, District of Massachusetts, “Warner Chilcott Agrees to Plead Guilty to Health Care Fraud Scheme and Pay $125 Million,” http://www.justice.gov/usao-ma/pr/warner-chilcott-agrees-plead-guilty-health-care-fraud-scheme-and-pay-125-million.]