Last month, the Department of Justice announced that pharmaceutical company Mallinckrodt ARD LLC had settled a $15 million claim that it persuaded physicians to write prescriptions for Mallinckrodt (formerly known as “Questcor”) drugs by “wining and dining” doctors. The Federal Anti-Kickback Statute expressly prohibits pharmaceutical companies from offering any remuneration at all, even indirect, to persuade a physician to prescribe a drug.
In this case, the whistleblowers showed that from 2009-2013, Mallinckrodt used lavish meals and entertainment to motivate doctors to prescribe Mallinckrodt drugs. Because the prescriptions violated the Federal Anti-Kickback Statute, the money Mallinckrodt received from Medicare in payment for those prescriptions was in violation of the False Claims Act. Not only did the government recover over $15 million, but the whistleblowers who exposed this fraud received almost $2.926 million.
UNDERSTANDING THE CASE
Mallinckrodt ARD LLC is a global specialty pharmacy that has been in business for over 150 years. The company had net sales of $3.2 billion in 2017 alone. Some of its key generic specialty products include Hydrocodone and Oxycodone. It is one of the major contributors to prescription opioids in the country over the last few years and has been in hot water with the DEA for excessive opioid shipments to pharmacies.
In 2012, they got into further legal trouble with their main drug Acthar, a specialty drug used to treat multiple sclerosis. In 2017, they reached a $100 million settlement with the U.S. Federal Trade Commission in relation to antitrust probes on Acthar. According to the whistleblower lawsuit, from 2009 to 2013, twelve sales representatives marketing Acthar provided illegal payments to healthcare providers in the form of meals and entertainment. These marketing representatives paid these kickbacks to healthcare providers to persuade them to prescribe Acthar to their patients.
The whistleblower lawsuit was first initiated by Charles Strunk, a former sales specialist, and Lisa Pratta, a former neurology specialist. Both were involved in the marketing of Acthar. They alleged that the company offered doctors bonuses for prescribing and promoting Acthar to their patients. These bonuses were as high as $80,000 per month. Prosecutors also uncovered that the company promoted the drug for off-label uses and instructed their staff to hide the evidence of their illegal marketing practices.
These allegations were originally filed in two cases under the qui tam provision of the False Claims Act. This act permits private citizens and employees to file a lawsuit on behalf of the U.S. government, exposing fraudulent or illegal activity. The lawsuits were consolidated into one lawsuit in July.
These lawsuits also made claims that Mallinckrodt used a foundation to funnel payments for illegal kickbacks in the form of copay subsidies for Acthar. The agreed-upon $15 million settlement does not resolve those claims. The government is continuing its pursuit of those claims.
KICKBACKS VIOLATE THE FALSE CLAIMS ACT
Kickbacks are an illegal “pay to play” practice that does not belong in our modern healthcare system. These types of business practices drive up the cost of healthcare and jeopardize a physician’s ability to make the best decisions for their patients.
Over the years, the U.S. Government was billed for thousands of vials of Acthar. Without illegal kickback and marketing schemes, many of those patients may have been prescribed alternative drugs for their illnesses.
Kickbacks cheat the government and all taxpayers who rely on government healthcare programs for care. By pursuing this lawsuit, the government illustrated their ongoing commitment to combating healthcare fraud and illegal activity. Using the False Claims Act, whistleblowers and the government can hold unscrupulous pharmaceutical companies and healthcare organizations accountable.
CONTACT OUR MEDICARE FRAUD ATTORNEYS TODAY
At Price Armstrong, we have successfully represented whistleblowers in numerous cases under the False Claims Act. We believe that pharmaceutical companies who violate the laws should be held accountable for their actions. As such, we work tirelessly to help protect whistleblowers throughout the legal process and to maximize their recovery. Contact us today for a free, confidential consultation.
