FOR IMMEDIATE RELEASE CONTACT: CHRISTINA DiIORIO-STERLING
October 28, 2009 PHONE: (617)748-3356
WWW.USDOJ.GOV/USAO/MA E-MAIL: USAMA.MEDIA@USDOJ.GOV
UNITED STATES ATTORNEY’S OFFICE
HEALTHCARE FRAUD RECOVERIES EXCEED $6.8 BILLION
BOSTON, MA - Acting United States Attorney Michael K. Loucks announced today that
total healthcare fraud recoveries for the District of Massachusetts now exceeds $6.8 billion dollars, which includes Pfizer Corporation's recent payment of $2.3 billion on October 23, 2009.
Over the past fifteen years, these recoveries represent almost 30 % of the total recovered nationwide in all federal health care fraud cases, civil and criminal (the total recoveries are approximately $23 billion dollars) . During those fifteen years, the District of Massachusetts has been the leader in recoveries by U.S. Attorney’s Offices across the country.
Acting U.S. Attorney Loucks praised the prosecutors and staff in his office handling health care fraud cases, “I take great pride in the fact that this office has been the national leader in the investigation and prosecution of health care fraud matters. Our success is a true testament to the hard working attorneys, paralegals, auditors and secretaries in this office, whose strong sense of team and mission has forged unprecedented collaborations with all of our federal law enforcement partners. I would like to acknowledge and thank the Fraud Section and the Consumer Litigation Division of the Civil Division of the Department of Justice, and the many other United States Attorney's Offices who have worked, and continue to work, closely with us. I would also like to acknowledge one of our frequent partners, the United States Attorney in Philadelphia, who played a critical role in assuring the recovery of $300,000,000 of the $2.3 billion recovered from Pfizer.”
Health care fraud cases can be complex, time consuming and demanding, and investigations frequently take years to come to fruition. The investigations also require forging close partnerships with the core law enforcement agencies, including: the Office of Inspector General for the Department of Health and Human Services; the Federal Bureau of Investigation; the Postal Inspection Service; the FDA's Office of Criminal Investigations; the U.S. Department of Veterans Affairs, Office of Inspector General; the Inspector General’s Office for the Office of Personnel Management; the Inspector General’s Office of the Labor Department; and the Defense Criminal Investigation Service.
Criminal and civil prosecutions in health care fraud in Massachusetts over the past fifteen years that resulted in payments in excess of $50 million include the following:
Year |
Defendant |
Payment |
|---|---|---|
| 2009 | Pharmacia & Upjohn Company (Pfizer) | $2,300,000,000 |
| 2009 | Aventis Pharmaceuticals, Inc. | $96,579,241 |
| 2007 | Bristol-Myers Squibb Co., Apothecon, Inc. | $515,000,000 |
| 2006 | Schering-Plough Corp., through its subsidiary Schering Sales Corp. | $435,000,000 |
| 2005 | Serono, Inc. | $704,000,000 |
| 2005 | SmithKline Beecham Corp., d/b/a GlaxoSmithKline | $150,000,000 |
| 2005 | Boston Scientific Corp. | $74,000,000 |
| 2004 | Pfizer Corp., subsidiaries Warner Lambert, Inc. & Parke-Davis | $430,000,000 |
| 2003 | Bayer Corp. | $257,200,000 |
| 2003 | SmithKline Beecham Corp., d/b/a GlaxoSmithKline | $87,600,922 |
| 2001 | TAP Pharmaceutical Products, Inc. | $875,000,000 |
| 2000 | National Medical Care | $486,000,000 |
| 1997 | Damon Clinical Laboratories, Inc. | $119,000,000 |
| 1994 | C.R. Bard, Inc. | $61,000,000 |
Acting United States Attorney Loucks also noted that the Office has played a leadership role in ongoing litigation regarding pricing manipulation schemes utilized in the pharmaceutical industry. Notably, on September 23, 2009, the First Circuit Court of Appeals issued an Opinion in what is called the Average Wholesale Price litigation, affirming a decision by United States District Judge Patty Saris. In re Pharmaceutical Industry Average Wholesale Price Litigation, 2009 WL 3019691 (1st Cir. 2009). In that case, drug company AstraZeneca had appealed a decision finding it liable for having created and manipulated a pricing spread on its product, Zoladex, a treatment for prostate cancer. This civil litigation was triggered by the U.S. Attorney’s Office’s earlier prosecution of TAP Pharmaceutical Products, Inc. for certain sales and marketing conduct involving its prostate cancer drug, Lupron. Both AstraZeneca and TAP, aware that the Medicare Program would reimburse a physician at the price for their drug as published in an industry publication, competed against each other in lowering prices to physicians. This was done in an effort to provide the physician with what both companies called “a return to practice,” in essence the profit margin that the doctor would earn. At times, the profit per Lupron or Zoladex injection was in the hundreds of dollars as the two companies competed to gain market share. The U.S. Attorney’s Office first challenged that conduct in the prosecution of TAP; as the First Circuit wrote in September:
We note that AstraZeneca's choice to judge its conduct relative to that of TAP Pharmaceuticals was ill-considered, given that TAP Pharmaceuticals later pled guilty to conspiring to violate the Prescription Drug Marketing Act based on conduct during this time period that included, inter alia, inflating AWP to market the spread.
The First Circuit also affirmed in that litigation the position asserted by this office and by attorneys with the Department of Justice that Congress had never acquiesced in or approved the return to practice spreads. As the First Circuit wrote:
In response to AstraZeneca's argument that Congress had acquiesced in the practice of creating mega-spreads, the government notes that “[t]he notion that Congress intended to grant manufacturers unfettered discretion to adopt spreads exceeding 150%, and cabin the problem by reducing reimbursement rates by five percent [when it passed the BBA], is difficult to fathom,” and observes, “[t]hat ... opportunities for abuse exist in the Medicare statute does not mean that Congress has authorized them.” We agree.
Acting U.S. Attorney Loucks added, “ We have, for more than fifteen years, taken strong and clear positions on behalf of the American taxpayer, against schemes and artifices clearly designed to fleece government health care programs, whether the artifice was the addition of a medically unnecessary lab test to a commonly ordered panel of tests to gin up payments from Medicare, or a scheme to pump up charges to government programs to induce doctor prescriptions, like that involved with the return to practice fraud. The ruling by the First Circuit is a strong affirmation of our mission.”
Assistant United States Attorneys who in their present assignments in the office are working on or helping to manage health care fraud matters include: James Arnold, Chief of Affirmative Litigation Sara M. Bloom, Civil Division Chief Jennifer C. Boal, Mary Elizabeth Carmody, Zachary A. Cunha, Criminal Division Chief James B. Farmer, Jeffrey Fauci, Anton Giedt, George B. Henderson, Michelle Dineen Jarrett, Shannon Kelley, Acting Deputy Chief of the Criminal Division John McNeil, Susan M. Poswistilo, Sonya Rao, Donald J. Savery, David Schumacher, Gregg D. Shapiro, Barbara Healy Smith, Eve Piedmonte Stacey,Health Care Fraud Unit Deputy Chief Jeremy M. Sternberg, Amanda P. Strachan, Christine J. Wichers, Health Care Fraud Unit Chief Susan G. Winkler, and Shelbey D. Wright.
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