Warner Chilcott Agrees to Plead Guilty to Felony Health Care Fraud Scheme and Pay $125 Million to Resolve Criminal Liability and False Claims Act Allegations
Last October, Warner Chilcott U.S. Sales LLC agreed to plead guilty to health care fraud against the U.S. Government. According to the U.S. Justice Department, Chilcott – which is a subsidiary of pharmaceutical manufacturer Warner Chilcott PLC – agreed to pay a $125 million settlement to resolve the charge. The charges were that it illegally marketed the drugs Actonel, Asacol, Atelvia, Doryx, Enablex, Estrace and Loestrin. Several other individuals also pled guilty or were charged in connection with the company’s activities. Some of those charges were criminal in nature.
Warner Chilcott pled guilty to criminal charges that the company committed felony violations when it:
- Paid kickbacks to physicians inducing them to prescribe its drugs.
- Manipulated prior authorizations to persuade insurance companies to pay for Atelvia® which insurers might not have otherwise paid for.
- Made unsubstantiated claims for the drug Actonel®
The indictment – which was unsealed in the District of Massachusetts on October 29, 2015 – charged Warner Chilcott former President, W. Carl Reichel, with conspiring to pay kickbacks to physicians. Reichel had been arrested earlier that day and had made an initial court appearance before a U.S. District Court judge. “The Department will continue to hold companies and responsible individuals accountable when they use improper incentives, like those alleged here, to promote their products,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer.
The government charged that between 2009 and 2013, Warner Chilcott’s management team, knowingly and willfully paid remuneration to physicians in order to induce those physicians to prescribe Warner Chilcott drugs. (It is illegal to offer or pay remuneration to physicians to induce them to refer individuals to pharmacies for the dispensing of drugs for which payments are made in whole or in part under a federal health care program.)
The government further alleged that Warner Chilcott employees, at the direction of company management, provided payments, meals and other remuneration associated with so-called “Medical Education Events.” These events often contained no educational information and were used to pay prescribing physicians to gain an advantage over other companies. Warner Chilcott also used high-prescribing physicians as “speakers” for the company who did not actually speak on clinical topics. Instead, Chilcott threatened the physicians’ pay if they did not change their prescription habits.
In addition, the government alleged that from 2011 to 2013, Warner Chilcott employees knowingly submitted false, inaccurate, or misleading prior authorization requests to federal health care programs for Atelvia and Actonel. This misleading information was given to certain insurance companies in order to overcome restrictions that favored less expensive drugs. In some cases, sales representatives coached physicians and staff about which medical justifications would result in an approved prior authorization, whether or not the justification was true for a specific patient.
Finally, the information showed that Warner Chilcott employees were instructed by members of the company’s management team to make unsubstantiated superiority claims when marketing the drug Actonel. Warner Chilcott management directed the sales representatives to make the superiority claim even though such claims were not supported by clinical evidence. Under the terms of the plea agreement, Warner Chilcott will pay a criminal fine of $22.94 million and $102.06 million in a civil settlement agreement to resolve charges that it violated the Anti-Kickback. The federal share of the civil settlement is approximately $91.5 million, and the state Medicaid share of the civil settlement is approximately $10.6 million.
Two former Warner Chilcott district managers, Jeffrey Podolsky and Timothy Garcia previously pleaded guilty of conspiracy to commit health care fraud and violations of the Health Insurance Portability and Accountability Act (HIPAA). A third former district manager, Landon Eckles, was criminally charged in October of this year for alleged HIPAA violations relating to the alleged prior authorization scheme. Rita Luthra, M.D., was charged with accepting free meals and speaker fees from Warner Chilcott in return for prescribing its drugs.
The civil settlement resolved a lawsuit filed under the whistleblower provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims, to share in any recovery and to receive whistleblower protection. The civil lawsuit was filed in the District of Massachusetts and is captioned United States ex rel. Alexander, et al. v. Warner Chilcott plc, et al., Civil Action No. 11-CA-1121 (D. Mass.). As part of the resolution, the whistleblowers will receive approximately $22.9 million from the federal share of the civil recovery.
This settlement illustrates the government’s continuing prosecution of Medicare fraud cases. Since January 2009, the Justice Department has recovered a total of more than $26.2 billion through False Claims Act cases, with more than $16.4 billion of that amount recovered in cases involving fraud against federal health care programs. Persons who feel they are entitled to whistleblower protection can file a qui tam law suit.