PHARMACEUTICAL WHISTLEBLOWER BLOG: Pharmaceutical Company Daiichi to Pay $39 Million to Settle Fraud Allegations Involving Improper Kickbacks

On January 9, 2015, the Department of Justice announced that Daiichi Sankyo Inc., a global pharmaceutical company with its U.S. headquarters in New Jersey, agreed to pay the federal government and state Medicaid programs $39 million to resolve a whistleblower lawsuit alleging pharmaceutical fraud.  The whistleblower lawsuit, brought under the federal False Claims Act, alleged that the Pharmaceutical manufacturer violated the Anti-Kickback Statute, and therefore violated the civil False Claims Act, by paying kickbacks to induce physicians to prescribe Daiichi’s drugs. A common form of pharmaceutical fraud actionable under the civil False Claims Act.

Obviously, providing compensation to physicians to prescribe a particular medication is a bad practice. Such inducements influence the doctor’s decision when choosing which drug to prescribe to a patient. As a result, the physician is not providing his patients with objective medical judgment – rather the doctor’s judgment is skewed due to the financial benefit he will receive by prescribing patients to a particular drug. This type of influence over a physician’s decision making is exactly the type of thing the Anti-Kickback Statute seeks to prevent. In addition, this inappropriate influence over physician’s makes health care more expensive because doctors are prescribing more expense brand-name drugs, rather than less expensive generic medications.

The Anti-Kickback Statute was enacted to ensure that physicians’ medical judgment is not compromised by improper payments and gifts by other health care providers.  The statute generally prohibits anyone from offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federal health care programs, including Medicare and Medicaid.

This case involves allegations that the pharmaceutical company provided physicians with improper kickbacks under the guise of “speaker fees” for speaking at Daiichi’s events.

The whistleblower lawsuit alleges that the company made speaker fee payments to physicians even when physician participants took turns “speaking” on duplicative topics over Daiichi-paid dinners, the recipient spoke only to members of his or her own staff in his or her own office, or the associated dinner was so lavish that its cost exceeded Daiichi’s own internal cost limitation of $140 per person.

“Drug companies are prohibited from using lavish entertainment and padded speaker program payments to induce physicians to prescribe their drugs for beneficiaries of federal health care programs,” said U.S. Attorney Carmen Ortiz for the District of Massachusetts.  “Settlements like this one show that the government will continue to pursue health care companies that use kickbacks to promote their products.”

“Schemes such as this are particularly abhorrent,” said Inspector General Daniel R. Levinson for the U.S. Department of Health and Human Services.  “Manufacturers and physicians who engage in them are cheating Medicare and Medicaid out of millions of dollars and threatening programs upon which many elderly and disabled Americans rely.  My office will take whatever steps necessary to guard against improper alliances between manufacturers of drugs and those who prescribe them.  Through our corporate integrity agreement we will be closely monitoring Daiichi.”

The settlement also included a corporate integrity agreement that Daiichi must enter with the Department of Health and Human Services-Office of the Inspector General, which will require the company to create stricter internal compliance measures for the next five years.

The settlement stems from a whistleblower lawsuit filed by the attorneys of a former Daiichi sales representative. For her part, the whistleblower will receive $6.1 million of the federal recovery.

The case is captioned U.S. ex rel. Fragoules v. Daiichi Sankyo, Inc., Civil Action No. 10-10420 (D. Mass.).

No Fees Without Recovery

Ross M. Wolfe and the Weiser Law Firm litigate whistleblower lawsuits on a contingent fee basis, so whistleblowers do not pay attorneys’ fees or court costs unless there is a recovery.

Please contact Ross M. Wolfe if you would like to speak with a whistleblower attorney for more information about Pharmaceutical Fraud or to schedule a free consultation to confidentially discuss your potential case.