Pharma maker Daiichi-Sankyo pays $39 million to settle whistleblower cases

New York and 48 other states and the District of Columbia have reached a settlement with Daiichi Sankyo, Inc. (Daiichi), a global pharmaceutical company with US headquarters in New Jersey which will pay $39 million. It was alleged that Daiichi violated the False Claims Act by using lavish meals and speaker programs to improperly induce physicians to prescribe the drugs Azor, Benicar, Tribenzor and Welchol. Under the agreement, Daiichi agrees to pay the United States and the state Medicaid programs 39 million dollars, 10 million dollars to the state Medicaid Programs and 19 million to other Federal programs.

The settlement resolves allegations that Daiichi caused the submission of false claims for reimbursement by the Medicaid program (and other federal programs) for Azor, Benicar, Tribenzor and Welchol. The claims were false because they resulted from kickbacks that Daiichi provided to prescribing physicians. Specifically, the agreement alleges that the kickbacks took the form of honoraria payments, meals and other remuneration to physicians who participated or supposedly participated in physician opinion & discussion programs from January 1, 2005 through March 31, 2011 and other speaker programs from January 1, 2004 through February 4, 2011.

It is contended that the programs were in fact kickbacks because the physicians were paid by Daiichi even if the physician spoke only to members of his or her own staff in their office; physician participants took turns accepting “speaker” honoraria for duplicative discussions; the audience included the honoraria physician’s spouse; the speaker was paid even if the event was cancelled beforehand; and/or the dinners were lavish and even exceeded Daiichi’s own internal cost limitations of $140 per person.

The Federal Anti-Kickback Statute was enacted so that physicians’ medical judgment was not influenced by improper payment or gifts. The statute prohibits anyone from offering, paying, soliciting or receiving such remuneration to induce referrals of services covered by federal health care programs including Medicaid.

The settlement stems from a complaint filed by whistleblower, Kathy Fragoules, a former Daiichi sales representative, under the Federal and New York State False Claims Act.

Jeffrey Newman represents whistleblowers. He did not represent Ms. Fragoules.