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Pharmaceutical Company Agrees to pay More than $7.55 Million to Resolve Alleged False Claims Act Violations

While the nation’s growing opioid crisis is more than a little disheartening, it is somewhat encouraging to see the government take action against companies that are alleged to have knowingly contributed to the problem. Such was the case back in September of this year when the Department of Justice announced that pharmaceutical company Galena Biopharma Inc. (Galena) had agreed to pay $7.55 million to resolve allegations that it paid kickbacks to doctors to induce them to prescribe Abstral. Abstral is a fentanyl-based opioid that is used to treat “breakthrough” cancer pain that is not controlled by other medicines. “Given the dangers associated with opioids such as Abstral, it is imperative that prescriptions be based on a patient’s medical need rather than a doctor’s financial interests,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The Department of Justice intends to vigorously pursue those who offer and receive illegal inducements that undermine the integrity of government health care programs.” Among the many allegations that the government leveled at Galena is that it:

  • Paid kickbacks to doctors in order to induce them to prescribe their drug Astral. Galena is alleged to have offered the following incentives:
  • Gave free meals to doctors and staff
  • Paid doctors of $5,000 and speakers $6,000 plus expenses to attend a Galena sponsored “advisory board”
  • Paid approximately $92,000 to a physician owned pharmacy to induce owners to prescribe the opioid.

Additionally, the government alleges that Galena paid doctors to refer patients to the company’s RELIEF patient registry study with the aim of inducing doctors to prescribe Abstral. Two of the doctors who benefited from the kickback scheme were tried, convicted and later sentenced to prison in the U.S. District Court for the Southern District of Alabama. The settlement arose from a lawsuit that was initially filled by Lynne Dougherty under the whistleblower or qui tam provisions of the False Claims Act. These provisions permit private parties to file a suit on behalf of the United States and obtain a portion of the government’s recovery. Ms. Dougherty received more than $1.2 million as part of the settlement reach back in September.