US WorldMeds Settles Whistleblower Lawsuit for $17.5 Million

Allegations were made of kickbacks in the form of co-pay waivers.

Late last month, US WorldMeds, a pharmaceutical manufacturer, agreed to pay the U.S. Department of Justice (DOJ) $17.5 million  to resolve two whistleblowers’ claims that it violated the False Claims Act (FCA) by paying kickbacks to patients and doctors to boost sales of two of their drugs, Apokyn, a drug used to treat Parkinson’s disease, and Myobloc, a drug used to assist in certain high-risk pregnancies. This settlement illustrates the sheer variety of forms alleged kickbacks paid to physicians can take and how lucrative they can be. 

Broadly speaking, the Anti-Kickback Statute prohibits healthcare providers, including pharmaceutical companies, from paying or receiving kickbacks, remuneration, or anything of value to induce patients to purchase or use a company’s drugs.  The law seeks to prevent physicians from prescribing medically unnecessary medications. The Anti-Kickback Statute is also intended to ensure that a physician’s medical judgment is not compromised by financial incentives and is solely based on the best interests of the patient.

The DOJ settlement with US WorldMeds resolves allegations surrounding two basic schemes. The first scheme allegedly sought to induce patients to purchase Apokyn by offering them waivers of co-pays, a fee that Medicare beneficiaries are required to pay for medications. These fees are generally paid in the form of a co-payment of a deductible, and they are legally mandated. Drug makers reimbursing patients for these costs, however, can run afoul of the Anti-Kickback Statute.

After US WorldMeds raised prices of Apokyn in 2012, many patients’ co-pays exceeded $5,000 a year. At the same time, US WorldMeds allegedly funded a third-party foundation that paid the co-pays of many patients with the goal of increasing the sales of Apokyn at the new, higher rate. US WorldMeds was the foundation’s only donor.

For the second scheme, US WorldMeds allegedly provided certain physicians with kickbacks that were meant to induce them to prescribe more Apokyn and Myobloc. According to the complaint, the doctors were paid excessive consulting and speaker fees and also were bought lavish meals, private plane rides to Hawaii, and all-expenses-paid trips with their spouses to the Kentucky Derby, where one doctor was seated in the US WorldMeds company box. The schemes were alleged to be both large, long-running, and nationwide.

In addition to paying $17.5 million, US WorldMeds entered into a five-year corporate integrity agreement with the government. Under the terms of the agreement, US WorldMeds will need to hire an outside independent review organization to monitor its promotional activities and its interactions with third-party charities.

These alleged fraud schemes were revealed in two different lawsuits brought by two whistleblowers, Brian Bennett, a former national sales director, and Dr. Robert Chinnapongse, a former senior medical director at US WorldMeds.  The whistleblowers will receive an award of more than $3 million under provisions of the FCA’s qui tam, which allow private persons to file suit against entities that defraud the government and if their suits are successful, whistleblowers are entitled to receive between 15 and 25 percent of the government’s recovery.

The US WorldMeds whistleblowers alleged further wrongdoing, such as off label marketing of the drugs for cosmetic dental use. Those allegations, however, have not been resolved.

As these cases demonstrate, the vigilant and discerning eyes of pharmaceutical employees are essential in combating the increasing number of alleged frauds involving kickbacks, given that business relationships such as the one between US WorldMeds and physicians are often opaque and require the perspective of company insiders.

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