Warner Chilcott U.S. Sales, a subsidiary of pharmaceutical maker Warner Chilcott, today reached a $125 million settlement with the Department of Justice to resolve criminal and civil liability charges arising from the company’s illegal marketing of seven of its drugs.

Warner Chilcott agreed to plead guilty in the District of Massachusetts to resolve claims that it paid kickbacks to physicians throughout the United States to induce them to prescribe its drugs. Specifically, the plea agreement arises from Warner Chilcott’s illegal marketing of the drugs Actonel, Asacol, Atelvia, Doryx, Enablex, Estrace, and Loestrin.

“Pharmaceutical companies and their employees have a significant responsibility to sell and market drugs in an ethical and legal manner,” said Special Agent in Charge Harold Shaw of the FBI’s Boston Field Office.  “This settlement and the related indictments reflect the commitment of the FBI and our government partners to aggressively investigate companies and individuals who fail that responsibility and seek to profit from fraudulent activities.”

Under the terms of the plea agreement, Warner Chilcott will pay a criminal fine of $23 million. The company also entered into a civil settlement under which it agreed to pay $102 million to the federal government and the states to resolve claims arising from its conduct.

Case Details

According to court documents, Warner Chilcott, through its employees acting at the direction of members of the company’s management team, knowingly and willfully paid remuneration to physicians in order to induce those physicians to prescribe Warner Chilcott drugs between 2009 and 2013. Under the law, 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. 

According to court documents, Warner Chilcott committed healthcare fraud in the following ways:

Sham “Medical Education Events.” Warner Chilcott employees, at the direction of company management, held sham “Medical Education Events.” These events, often were held at expensive restaurants and often contained minimal or no educational component. Instead, they were used to pay prescribing physicians in an attempt to gain a “competitive advantage” over other companies. 

Puppet speakers. Warner Chilcott also enlisted high-prescribing physicians as “speakers” for the company.  In fact, the “speakers” often did not actually speak about any clinical or scientific topics, and, instead, the payments were primarily intended to induce prescriptions.  For example, Warner Chilcott informed “speakers” who weren’t prescribing at a high volume that they would not be paid for subsequent events unless their prescribing habits increased.      

False, inaccurate, or misleading prior authorization requests. From 2011 to 2013, Warner Chilcott employees knowingly and willfully submitted “false, inaccurate, or misleading prior authorization requests” to federal health care programs for the osteoporosis medications Atelvia and Actonel to certain insurance companies to overcome formulary restrictions that favored less expensive osteoporosis 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 particular patient.  

Unsubstantiated superiority claims. Members of the company’s management team instructed Warner Chilcott employees to make unsubstantiated superiority claims when marketing the drug Actonel. Warner Chilcott management directed the sales representatives to make the superiority claim, even though the claim was not supported by clinical evidence.  

The case, United States ex rel. Alexander, et al. v. Warner Chilcott, resolves 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 and to share in any recovery.  The whistleblowers will receive approximately $23 million from the federal share of the civil recovery.

Individual Accountability

Prior to today’s guilty plea, several individuals were either criminally charged or pleaded guilty to various offenses related to the company’s alleged conduct. Two former district managers, Jeffrey Podolsky and Timothy Garcia, previously pleaded guilty to various charges, including 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 earlier this month for alleged HIPAA violations relating to the alleged prior authorization scheme. Last week, a physician, Rita Luthra, was charged with, among other things, allegedly accepting free meals and speaker fees from Warner Chilcott in return for prescribing its osteoporosis drugs.