A.G. Schneiderman Announces Kickback Settlement With Pharma Manufacturer Daiichi-Sankyo

New York Leads Team Of 49 States And DC In $39 Million Settlement To Resolve Kickback Suit

Schneiderman: My Office Will Hold Accountable Companies That Attempt To Improperly Influence Physicians For Profit

NEW YORK – Attorney General Eric T. Schneiderman today announced that New York, along with 49 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. The settlement resolves allegations 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. Under this agreement, the New York State Medicaid program will receive $2,339,671.

"This settlement sends the message loud and clear: My office will hold accountable companies that attempt to improperly influence physicians for the benefit of their bottom line," Attorney General Schneiderman said. "A physician's decision concerning what drugs to prescribe should be based on what is best for the patient, not what perks they may get from a drug company."

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 New York State Medicaid Fraud Control Unit led a national team from California, Massachusetts and Maryland working with the Department of Justice and the United States Attorney's Office for the District of Massachusetts in investigating this matter. The US Attorney's office for the District of Massachusetts announced the federal settlement in January.

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, which authorize private individuals to sue on behalf of the State of New York and the Federal Government. The Attorney General would like to thank Ms. Fragoules for her efforts in bringing this matter to light.

The national team was led by Jay Speers, Counsel to the Medicaid Fraud Control Unit (MFCU), also part of the national team from New York were Senior Auditor/Investigator Matthew Tandle and Supervising Auditor/Investigator Michael Beers. The MFCU is led by Acting Director Amy Held. The Criminal Justice Division is led by Executive Deputy Attorney General Kelly Donovan.

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