Japanese pharmaceutical company Daiichi Sankyo this month agreed to pay $39 million to the government to resolve allegations that it violated the False Claims Act by paying kickbacks to induce physicians to prescribe Daiichi drugs.  

The Anti-Kickback Statute prohibits anyone from offering, paying, soliciting or receiving payment to induce referrals of items or services covered by federal health care programs, including Medicare and Medicaid. 

According to the complaint, Daiichi paid physicians kickbacks under the guise of speaker fees as part of Daiichi’s Physician Organization and Discussion programs (PODs) from 2005 to 2011. Some physicians in the POD program received kickbacks while “speaking” on duplicative topics over expensive Daiichi-paid dinners, or for simply speaking to their own staff members about Daiichi products in their own offices, the Justice Department stated.

“Drug companies are prohibited from using lavish entertainment and padded speaker program payments to induce physicians to prescribe their drugs for beneficiaries of federal health care programs,” said U.S. Attorney Carmen Ortiz for the District of Massachusetts. “Settlements like this one show that the government will continue to pursue health care companies that use kickbacks to promote their products.”

The settlement resolves a whistleblower complaint filed by Kathy Fragoules, a former Daiichi sales representative. Fragoules filed the lawsuit under the FCA’s whistleblower provisions, which permit individuals who discover fraud to file claims on behalf of the government and to share in any recovery. Fragoules will receive $6.1 million for the tips she provided.

As part of the settlement, Daiichi has agreed to enter into a corporate integrity agreement with the Department of Health and Human Services-Office of Inspector General (HHS-OIG), which obligates it to undertake substantial internal compliance reforms for the next five years.

In a statement, Ken Keller, who heads U.S. commercial operations for Daiichi Sankyo, said, “As part of our compliance program, we continue to review and strengthen our policies, procedures and processes to ensure compliance with applicable laws, regulations and industry standards, and to meet our own high ethical standards.”

The investigation was conducted by the Civil Division, the U.S. Attorney’s Office for the District of Massachusetts, the Department of Veterans Affairs, the Department of Defense Criminal Investigative Service, HHS-OIG and the FBI.