Posts Tagged ‘Big Pharma’

Generic Drug Price Fixing


Connecticut Attorney General William Tong interviewed on 60 Minutes

If you ever wondered why the price of generic drugs is getting so expensive, 60 Minutes gave us an inside look at the problem on its Sunday broadcast. The CBS program profiled the on-going battle of Connecticut Attorney General William Tong to hold big pharma accountable.

Connecticut and more than 40 other states filed a sweeping lawsuit accusing the biggest generic drug makers of engaging in an “industry-wide conspiracy” to fix the prices of generic drugs. They allege there is a massive, systematic scheme to bilk consumers and the government out of billions of dollars.

Based on evidence like text messages, emails, phone records, and documents, the prosecutors say sudden, dramatic, price spikes can be tied to drug makers colluding to profiteer, not a shortage of drugs. In a word “greed.”

The price hikes have affected 100’s of different, everyday prescriptions, driving up the costs for health insurance, Medicare and Medicaid. With 90-percent of all prescriptions filled with generic drugs, the impact on everyday American lives has been overwhelming.

Drug makers deny any wrong-doing and insist they will fight the lawsuits vigorously. Click here to watch the 60 Minutes report.

 

Truth in Media Investigates Big Pharma

Judy pic - Truth in MediaThe online news website Truth in Media just finished a series of reports on Big Pharma. It’s a fascinating look at how the pharmaceutical industry has manipulated the system to increase sales and profits.

Part 4 of the series highlights the case of Endo pharmaceuticals and its orphan drug Lidoderm.  The James Hoyer Law Firm represented whistleblower Peggy Ryan in the case against Endo.  The False Claims Act suit ended with Endo paying $193-million to the government in a settlement for off-label marketing.

James Hoyer founding partner and former federal prosecutor Judy Hoyer was interviewed for the report.  Watch it below.

 

Olympus Med Equip Co. to Pay $646 Million Over Kickbacks & Bribes

The  largest distributor of endoscopes and related equipment in the United States, Olympus Corporation, will pay $623.2 million to resolve criminal charges and civil claims relating to a scheme to pay kickbacks to doctors and hospitals, the Department of Justice announced today.  The Justice Department’s Criminal Division also announced that a subsidiary of the distributor will pay $22.8 million to resolve criminal charges relating to the Foreign Corrupt Practices Act (FCPA) in Latin America.

Lavish Gifts

The LA Times reports that after Olympus paid to fly three doctors from a prominent California hospital to Japan for a week-long vacation, one of the physicians thanked the company for providing them with “so much extra entertainment that we did not expect.”

The expense-paid trip was just one of the dozens of illegal kickbacks that the Japanese maker of endoscopes paid to American doctors and hospitals for at least five years as it sought to increase sales in its most lucrative market, according to a criminal complaint federal prosecutors released Tuesday.

Among the company’s other illegal payments and gifts, the complaint said, were $400,000 worth of endoscopes given to a doctor after he persuaded a New York hospital to buy millions of dollars’ worth of Olympus equipment, and the free use of scopes worth $1 million provided to a Midwestern institution.

At one Olympus-sponsored forum, the company paid for doctors’ lavish meals, ballooning, winery tours, golf and spa treatments because it was “a great way to network, talk business, socialize without our competitors,” an Olympus employee explained, according to the complaint.

Whistleblower was Chief Compliance Officer

Pharmalot reports the agreements resolve a long-running investigation that was triggered by a whistleblower lawsuit filed by a former Olympus executive. John Slowik had worked at the device maker for nearly 18 years before becoming its first chief compliance officer in 2009. However, he was fired the following year after protesting kickbacks and attempting to implement reforms, according to his attorney. Slowik will receive $51.1 million from the civil settlement, before paying attorneys fees.

Anti-Kickback Statute Violations

The DOJ news release says Olympus Corp. of the Americas (OCA) was charged in a criminal complaint filed today in Newark, New Jersey, federal court with conspiracy to violate the Anti-Kickback Statute (AKS), which prohibits payments to induce purchases paid for by federal health care programs.  OCA has entered into a three-year deferred prosecution agreement (DPA) that will allow it to avoid conviction if it complies with the reform and compliance requirements outlined in the agreement.

“For years, Olympus Corporation of the Americas and Olympus Latin America dropped the compliance ball and failed to have in place policies and practices that would have prevented the substantial kickbacks and bribes they paid,” said U.S. Attorney Fishman. “It is appropriate that they be punished for that.  At the same time, the deferred prosecution agreement takes into account the companies’ cooperation and commitment to fully functional corporate compliance.”

As a result of the conduct outlined in the government’s criminal complaint and DPA, OCA has agreed to pay a $312.4 million criminal penalty and an additional $310.8 million to settle civil claims under the federal and various state False Claims Acts, the largest total amount paid in U.S. history for violations involving the AKS by a medical device company.

“The Department of Justice has longstanding concerns about improper financial relationships between medical device manufacturers and the health care providers who prescribe or use their products,” said Principal Deputy Assistant Attorney General Mizer.  “Such relationships can improperly influence a provider’s judgment about a patient’s health care needs, result in the use of inferior or overpriced equipment, and drive up health care costs for everybody.  In addition to yielding a substantial recovery for taxpayers, this settlement should send a clear message that we will not tolerate these types of abusive arrangements, and the pernicious effects they can have on our health care system.”

In a separate DPA, Olympus Latin America Inc. (OLA), a subsidiary of OCA, will pay a $22.8 million criminal penalty for violations of the FCPA.

The criminal complaint against OCA, which OCA agrees is true, charges that OCA won new business and rewarded sales by giving doctors and hospitals kickbacks, including consulting payments, foreign travel, lavish meals, millions of dollars in grants and free endoscopes.  For example:

  • OCA gave a hospital a $5,000 grant to facilitate a $750,000 sale;
  • OCA held up a $50,000 research grant until a second hospital signed a deal to purchase Olympus equipment;
  • OCA paid for a trip for three doctors to travel to Japan in 2007 as a quid pro quo for their hospital’s decision to switch from a competitor to Olympus; and
  • a doctor with a major role in a New York medical center’s buying decisions received free use of $400,000 in equipment for his private practice.

These and other kickbacks helped OCA obtain more than $600 million in sales and realize gross profits of more than $230 million.

The criminal complaint alleges that the improper payments happened while Olympus lacked training and compliance programs.  Unlike other medical and surgical products companies, Olympus did not create the position of compliance officer until 2009 and did not hire an experienced compliance professional until August 2010.

The DPA requires OCA to adopt several compliance measures to remedy its problems:

  • OCA must enhance its compliance training and maintain an effective compliance program;
  • OCA must maintain a confidential hotline and website for OCA employees and customers to report wrongdoing;
  • OCA’s chief executive officer and board of directors must certify annually that the program is effective; and
  • OCA must adopt an executive financial recoupment program requiring executives who engage in misconduct or fail to promote compliance to forfeit up to three years of performance pay.

Larry Mackey, a former federal prosecutor best known for trying the Oklahoma City bombing cases, has been selected as an independent monitor to evaluate and oversee Olympus’ compliance with the DPA.  He was selected by U.S. Attorney Fishman under department guidelines and approved by the Deputy Attorney General.  The DPA and monitor will remain in place for three years and can be extended for another two years if Olympus violates the DPA.

In the civil settlement, Olympus agrees to pay $310.8 million to the federal government and the states to resolve claims that Olympus’s payment of kickbacks caused false claims to be submitted to federal health care programs Medicare, Medicaid and TRICARE, and thus violated not only the AKS but also the federal and various state False Claims Acts.  The federal share of the civil settlement is $267,288,323, and Olympus will pay $43,512,053 million to participating states that contributed to the falsely claimed Medicaid payments at issue.

The civil settlement resolves a lawsuit filed by John Slowik, the former chief compliance officer of OCA, in the District of New Jersey, under the federal and various state False Claims Acts.  The acts permit whistleblowers to file suit for false claims against the government entities and to share in any recovery.  Mr. Slowik will receive $44,102, 573 million from the federal share and $7 million from the state share of the civil settlement amount.

 

CNBC report on how Big Pharma exploits ‘Orphan Drug’ status for profit

An in depth report by CNBC looks at the issue of big pharma exploiting orphan drug status to generate huge profits for blockbuster medications.  It highlights a new study by Johns Hopkins University School of Medicine which is raising concerns. Here is an excerpt:

A new study from Johns Hopkins University School of Medicine questions whether some of the biggest drug companies and their blockbuster medications are taking advantage of a decades-old act meant to increase research, development and drug approval for people suffering from rare diseases.

Drugs approved by the Food and Drug Administration as “orphan drugs” have seen sales increase from $46.6 billion in 2014 to $54 billion this year in the U.S. alone and are projected by drug industry consultant EvaluatePharma to reach above $60 billion in 2016. Worldwide, orphan drug sales are forecast to total $102 billion this year and $178 billion by 2020.

The 41 percent of all FDA approvals for new drugs in 2014 that were designated orphan drugs compares to six orphan drug approvals of a total 30 new drugs approved by the FDA in 1985 (two years after the Orphan Drug Act, also known as the ODA, was passed).

In 1983, the United States Orphan Drug Act (ODA) was passed in the hope that with more research and a faster approval process, new drugs could be available for “orphan diseases,” meaning those that affect less than 200,000 people. The ODA offers drug makers incentives to find treatments for rare diseases, including grants, tax incentives and extension of exclusive marketing rights to a drug for seven years.

“The loophole means more monopoly power for pharma companies selling common drugs that were snuck through the FDA as orphan drugs,” Dr. Marty Makary of Johns Hopkins, the lead researcher and senior author of the study, told CNBC.

Click here to read the full article.  This is the very issue exposed in the James Hoyer case against Endo Pharmaceuticals, which ended with the company returning some $193 million to the public coffers.

 

 

Rare Arrest In Big Pharma Whistleblower Case

A former executive with Warner Chilcott,  a division of Allergan, was arrested for allegedly directing employees to engage in illegal sales.  Forbes Magazine contributor Erika Kelton writes about how big of a deal that is, since executives are rarely held accountable for bad deeds by a company.

Here’s an excerpt from her article:

The arrest of former Warner Chilcott executive W. Carl Reichel for allegedly directing employees to engage in illegal sales tactics is big news – even bigger than the $125 million the pharma company paid the government to settle Medicare fraud charges recently.

Rarely has the Justice Department brought criminal charges against a top pharma or healthcare executive – no matter how egregious the Medicare or Medicaid fraud. And those cases haven’t always been successful.

One of the first times that a CEO for national healthcare company was prosecuted in connection with Medicare fraud was in 1992 when Robert E. Draper, president and chief executive of National Health Laboratories of La Jolla, Calif., pleaded guilty to two counts of submitting false claims and was sent to prison. His company paid $111 million for inducing doctors to order unnecessary blood tests, a scheme exposed by a whistleblower represented by my law firm.

Over the past two decades, however, prosecutions of CEOs of major corporations have been few and far between. More often, DOJ has charged mid- and lower-level healthcare company employees – district sales managers, sales reps, etc. – with crimes in connection with whistleblower cases, as they did in the case of Warner Chilcott, which was acquired by Allergan (formerly known as Actavis), in 2013.

Click here to read the entire article in Forbes.