Two whistleblower cases unsealed this week reveal how aggressive pharmaceutical marketing programs can cross the line into Medicare fraud and kickbacks. Trips to the Kentucky Derby for doctors and huge bonuses for sales reps can lead to bribes, conflicts of interest and poor-quality care.
In the settlement case, the company is charged with secretly covering co-pays for all Medicare patients –not just those in need — thus insulating them from a steep price hike. Good for the patients, whose co-pays could have reached $5,000, DOJ noted; bad for the rest of us, who have to pay the balance. That’s why the approach is considered a kickback.
The Department of Justice (DOJ) announced Tuesday that US WorldMeds will pay $17.5 million under the False Claims act to resolve kickback allegations related to two drugs. The company is based in Louisville. One of the kickbacks the DOJ cited was a trip to the Kentucky Derby for two doctors. The whistleblowers who brought the original qui tam case will be paid $3.2 million
The Questcor case was also initiated by whistleblowers. It is described in an unsealed seven-year-old complaint first detailed by CNN Tuesday. The company, now owned by Irish drug-maker Mallinckrodt, used generous bonuses, aggressive sales tactics and fraud to sell the expensive anti-seizure treatment, the complaint charges.
In a statement, Mallinckrodt “strongly disagrees with the substance of the complaints and the sensational characterization of the allegations.” It notes that the company has been working with the DOJ on a settlement.
Two company sales representatives filed the cases in 2012. One of them alleges the company fired her when she tried to raise the issues.
Questcor first made headlines in 2000 when it raised the price of the $50 anti-seizure drug to more than $20,000 –it is now up to $39,000 for a vial, according to CNN. A 2012 story in The New York Times reported the story behind the price hike is “a tale of aggressive marketing, questionable medicine and, not least, out-of-control costs.”
The whistleblowers’ complaints turn on the same sales tactics described in the Times story.The company’s strategy was to promote of “off-label” uses, which have not been vetted by the Food and Drug Administration (FDA). Doctors are allowed to use drugs off-label, but drug makers are prohibited from promoting uses not approved by the FDA. According to the suit:
Defendant expressly tied sales specialist compensation to sales growth, and it incentivized each sales specialist to increase sales growth irrespective of the rules against off-label marketing. Indeed, the company’s bonus structure ·which paid hefty bonuses each month based on the number of prescriptions shipped· was designed to promote a “sell at all cost” mentality within the sales force.