Ex-Drug Co. Head Found Not Guilty in Kickback Scheme
In another setback for the Obama Administration’s get-tough crackdown on FDA-regulated company executives in fraud cases, a jury in Boston federal court has acquitted former Warner Chilcott president W. Carl Reichel of conspiring to pay kickbacks to physicians. The case stemmed from an earlier government investigation that led to the company agreeing last October (see story) to plead guilty to a felony charge of health care fraud and pay $125 million to resolve its criminal and civil liability arising from the illegal marketing of the drugs Actonel, Asacol, Atelvia, Doryx, Enablex, Estrace and Loestrin. According to the Justice Department, the company “committed a felony violation by paying kickbacks to physicians throughout the U.S. to induce them to prescribe its drugs, manipulating prior authorizations to induce insurance companies to pay for prescriptions of Atelvia that the insurers may not have otherwise paid for and making unsubstantiated marketing claims for the drug Actonel.”
When Warner Chilcott agreed to plead guilty, the Justice Department said: “The department will continue to hold companies and responsible individuals accountable when they use improper incentives, like those alleged here, to promote their products.” Notwithstanding several recent company settlements over advertising and marketing activities, the government has had a next-to-impossible time winning convictions against senior managers. For example, Vascular Solutions and its CEO Howard Root were found not guilty earlier this year on all federal charges concerning alleged off-label promotions of the Vari-Lase Short Kit. This was a significant loss for the government and FDA because it was hailed as an escalation in enforcement for holding company executives responsible for corporate wrongdoing (see story).
During the trial, government prosecutors said Reichel was instrumental in the company’s efforts to pay remuneration to physicians in order to induce those physicians to prescribe Warner Chilcott drugs. The company allegedly provided payments, meals, and other remuneration associated with so-called “Medical Education Events.” These events, which were often held at expensive restaurants, frequently contained minimal or no educational component, and were instead used to pay prescribing physicians in an attempt to gain a competitive advantage over other pharmaceutical companies. Warner Chilcott also paid numerous high-prescribing physicians to be “speakers” for the company for the primary purpose of obtaining prescriptions, the government contended.
In court filings, Reichel’s attorneys said there was no evidence that he intended to violate the anti-kickback law or that he had any knowledge or understanding that illegal activities were occurring.