A former president of Warner-Chilcott, which is now owned by Allergan, was arrested today for conspiring to pay kickbacks to physicians. At the same time, the company agreed to plead guilty to health care fraud and pay $125 million to resolve criminal and civil charges in connection with illegally promoting several drugs.
An indictment  alleges that between 2009 and 2012, W. Carl Reichel created a strategy to give doctors money, free meals and phony speaking fees in exchange for writing prescriptions of Warner-Chilcott drugs. The authorities also charged him with providing sales reps with unlimited expense accounts in order to wine and dine doctors, and said he suggested targeting doctors who were already frequently prescribers. We asked his attorney for comment and will pass along any response.
[UPDATE: Reichel’s attorney told us that the “charges brought by the US Attorney are false… After all the facts are out, all of the government allegations will collapse.”]
So-called medical education events, which often were held at expensive restaurants, frequently contained minimal or no educational component, and were instead used to pay prescribing physicians in an attempt to gain a competitive advantage over other drug makers, according to a statement issued by the US Department of Justice. We asked Allergan for comment and will let you know what, if any, response comes back.
The arrest marks one of the rare instances in which federal authorities are attempting to hold the executive of a drug maker accountable for allegedly breaking the law. Over the years, a parade of drug companies has reached settlements, mostly for paying physicians to favor their medicines or illegally marketing products. Rarely, though, do executives suffer any consequences.
There have been a few exceptions. In 2007, three former executives from Purdue Pharma were banned from any dealings with Medicare and Medicaid for fraudulently marketing the OxyContin painkiller. And in 2012, four ex-officials from the Synthes medical device maker were banned after doing jail time for their roles in running an illegal clinical trial. Mostly, the feds resort to large fines.
But as we noted earlier this week, the US Department of Justice last month issued a memo  saying it will not let “culpable” people off the hook, even when their employers reach a deal. And several months ago, the US Department of Health and Human Services formed a special team to more aggressively pursue exclusions, the legal term for a ban from federal health care programs.
In announcing the deal and the arrest, Principal Deputy Assistant Attorney General Benjamin Mizer, who heads the Justice Department’s Civil Division, made a point of saying that “the department will continue to hold companies and responsible individuals accountable when they use improper incentives, like those alleged here, to promote their products.”
The actions come in response to a whistleblower lawsuit  that was filed in 2011 by two former Warner-Chilcott sales reps who claimed the drug maker illegally marketed medicines and paid kickbacks to doctors to boost prescriptions. The case provided details of a plan by the drug maker to pay speaking fees in order to “buy the business” and induce doctors to write prescriptions. Scott Simmer, one of the attorneys for the whistleblowers, says the feds recently joined the lawsuit.
Meanwhile, three former sales managers pleaded guilty or agreed to plead guilty for directing sales reps to access confidential patient data after insurers denied coverage for the drugs. The company sought the patient data in order to submit what are called prior authorization forms, which refer to specific requests made by doctors to insurers to provide coverage for a medicine, according to the feds.
Two former Warner-Chilcott sales managers – Timothy Garcia, 35, of Los Gatos, Calif., and Jeff Podolsky, 49, of East Meadow, NY, -pleaded guilty to one count of conspiracy to commit health care fraud. And Landon Eckles , 30, of Huntersville, NC, another former district manager, agreed to plead guilty to one count of wrongfully disclosing patient medical records, the feds said. We asked his attorney for comment and will update you accordingly.
And as we noted earlier today, the feds also indicted a physician , Dr. Margaret Luthra, for releasing patient data and accepting $23,500 in exchange for writing prescriptions. Her attorney told us that she denied the allegations and looks forward to going to trial.
[UPDATE: Allergan released a statement  that reiterates the details of the settlement, including the guilty plea and fines to be paid, and “maintains an effective compliance program.”]