Drug Maker to Settle Kickback, Off-Label Allegations for $41M

Kos Pharmaceuticals, a subsidiary of Abbott Laboratories, will pay more than $41 million to resolve criminal and civil False Claims Act violations related to illegal kickbacks and off-label marketing for the cholesterol drugs Advicor and Niaspan, the U.S. Justice Department announced.

Delaware-based Kos will pay more than $38 million to settle civil allegations under the False Claims Act. The civil settlement resolves allegations that Kos paid doctors, other medical professionals, physician groups, and MCOs illegal kickbacks in money, free travel, grants, honoraria, and other valuables and services, in violation of the Anti-Kickback Statute to get them to prescribe or recommend Niaspan and Advicor.

Wednesday?s announcement marks the second time in as many days that Abbott has been named in a multimillion dollar False Claims Act settlement related to Medicare/Medicaid fraud.
On Tuesday, federal prosecutors said Abbott and two other drug makers would pay a combined $421 million to settle whistleblower allegations that they inflated prices for drugs paid for by Medicare and Medicaid. Abbott agreed to pay $126.5 million to resolve the claims against it in two whistleblower cases challenging its pricing of intravenous dextrose solutions, sodium chloride solutions, sterile water, vancomycin, and the oral antibiotic drug erythromycin.

Abbott released a statement Wednesday saying "the actions occurred prior to Abbott's acquisition of Kos in 2006 and Abbott has not been accused of any wrongdoing."

In the Kos investigation, federal prosecutors claim the drug maker promoted the sale of Advicor as a first-line therapy for management of mixed dyslipidemias—a disruption of the lipids in the blood. The off-label use was not approved by the Food and Drug Administration, and it was not a medically-accepted indication for Medicare/Medicaid programs. The federal share of the civil settlement is $33.7 million and the state Medicaid share is $4.4 million.

"Pharmaceutical companies that pay kickbacks to medical professionals take from the taxpayers and undermine the integrity of choices that doctors make for their patients," said Tony West, assistant attorney general for the Civil Division of the Department of Justice. "We will work with our federal partners to ensure that important health care decisions are based on sound medicine, not illegal payments."

Kos has agreed to a deferred prosecution agreement related to one count of conspiracy to violate the Anti-Kickback Statute. The criminal information states that Kos conspired to violate the statute by agreeing to pay physicians kickbacks in exchange for prescribing for Kos drugs. Prosecutors claim that two doctors agreed to promote Kos products, including Advicor, to treat high cholesterol in exchange for money.

Between January 2002 and June 2006, one of the doctors wrote 4,130 prescriptions for Kos products. According to the court documents, some of those prescriptions were paid by Medicare and Medicaid. From 2002 to 2004, Kos paid the two doctors or a third party intermediary in the form of "sponsorship" of continuing medical education classes conducted by the doctors and purported speakers? fees. Kos has agreed to pay a $3.36 million criminal fine as a condition of the deferred prosecution agreement.

Federal prosecutors said they agreed to the deferred prosecution agreement because Kos conducted an internal investigation of misconduct, reported the findings to prosecutors, and has cooperated with the investigation.

The civil settlement resolves two whistleblower lawsuits brought forward by former Kos employees, who will split payments totaling more than $6.4 million from the federal share of the civil recovery.