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Department of Justice
U.S. Attorney’s Office
District of Massachusetts

Friday, April 15, 2016

Warner Chilcott Sentenced to Pay $125 Million for Health Care Fraud Scheme

BOSTON – Pharmaceutical company Warner Chilcott was sentenced today in U.S. District Court in Boston to pay $125 million to resolve criminal and civil liability arising from the illegal promotion of various drugs.  

“Doctors’ diagnoses must be based on the best interests of the patient, and not swayed by lavish meals or cash incentives,” said United States Attorney Carmen M. Ortiz.  “Today’s sentence sends a message to the health care industry: the government will take action and hold companies accountable when they prioritize profits over patient care.”  

“Today’s sentencing sends a firm message that pharmaceutical companies will be held accountable when they commit fraud and put profit over patient care,” said Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division.  “This investigation demonstrates the FBI’s commitment to aggressively investigate pharmaceutical companies who pay kickbacks to physicians to prescribe their products”

“Pharmaceutical companies and employees that provide physicians with kickbacks will be held accountable for their deplorable conduct,” said Special Agent in Charge Phillip M. Coyne of the Department of Health and Human Services Office of Inspector General. “We will continue to crack down on kickback arrangements, which can undermine drug choices for patients, cause spikes in health care costs, and erode the public’s trust in our health care system.”

“VA spends billions of dollars on medical care, so pursuing health care fraud investigations with our Federal law enforcement partners is a priority for VA OIG,” said Jeffrey G. Hughes, Special Agent in Charge, Department of Veterans Affairs, Office of Inspector General.  “The importance of pharmaceutical cases such as this one is magnified because VA civil damages are returned to the VA’s Pharmaceutical Supply Fund for the direct benefit of our Nation’s veterans.”

“The illegal marketing of pharmaceuticals and the payment of kickbacks puts patients at risk of receiving inappropriate treatment purely for profit motives,” said U.S. Office of Personnel Management Acting Inspector General Norbert E. Vint.  “We appreciate the efforts of all the investigating agencies and the Department of Justice that have held this company accountable for its actions and thereby protected the patients, including those insured by the Federal Employees Health Benefits Program.” 

Warner Chilcott was sentenced by U.S. District Court Judge F. Dennis Saylor, IV, to pay a criminal fine of $20,742,054, forfeiture of $2 million, and $197,946 in restitution to two insurance companies.  The company also agreed to pay $102,060,000 to resolve related civil claims.  In October 2015, Warner Chilcott pleaded guilty in connection with a multi-pronged health care fraud scheme involving the illegal promotion of the drugs Actonel®, Asacol®, Atelvia®, Doryx®, Enablex®, Estrace®, and Loestrin®, and various formulations of these drugs.

From 2009 to 2013, Warner Chilcott paid remuneration to physicians in order to induce those physicians to prescribe Warner Chilcott drugs, which is illegal.  Warner Chilcott provided payments, meals, and other remuneration associated with so-called “Medical Education Events.”  These events, which were often 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 pharmaceutical companies.  Warner Chilcott also paid numerous high-prescribing physicians to be “speakers” for the company for the primary purpose of obtaining prescriptions. 

During the same period of time, Warner Chilcott submitted false, inaccurate, or misleading prior authorization requests to federal health care programs for the osteoporosis medications Atelvia® and Actonel®.  A prior authorization request contains protected health information, including biographical data and information concerning a patient’s medical condition.  Warner Chilcott falsified and manipulated prior authorizations by providing false medical justifications for the prescriptions, often filling out the prior authorizations themselves.  The fraudulent requests were provided to certain insurance companies in order to overcome restrictions that favored less expensive osteoporosis drugs.  In some instances, Warner Chilcott sales representatives submitted these prior authorizations directly to insurance companies, holding themselves out to be physicians. 

In addition, Warner Chilcott made unsubstantiated superiority claims when marketing the drug Actonel® even though the claim was not supported by clinical evidence.  Physicians that were told Actonel® was superior to other bisphosphonates due to its supposedly unique “mechanism of action.” 

Under the terms of the criminal plea agreement, Warner Chilcott will pay a fine of $22,742,054 and forfeit $2 million dollars due to its illegal promotion.  The company will pay $191,467 in restitution to Humana and $6,479 in restitution to Blue Cross Blue Shield of Massachusetts in connection with Actonel and Atelvia claims that were paid based on false or manipulated prior authorizations.  Warner Chilcott also entered into a civil settlement agreement under which it agreed to pay $102,060,000 to the federal government and the states to resolve false claims it submitted to government health care programs.  The civil settlement resolved illegal remunerations that Warner Chilcott paid to prescribing physicians for the “Medical Education Events” and submission of false prior authorization requests for Atelvia® and Actonel®.  The federal share of the civil settlement is approximately $91.5 million, and the state Medicaid share of the civil settlement is approximately $10.6 million. 

Warner Chilcott cooperated with the government’s investigation into culpable individuals, which has led to several individual prosecutions.  Among them are:

  • Former district manager Jeffrey Podolsky pleaded guilty to health care fraud in connection with manipulating prior authorizations;

  • Former district manager Timothy Garcia pleaded guilty to health care fraud in connection with manipulating prior authorizations; and

  • Former district manager Landon Eckles pleaded guilty to wrongful disclosure of individual identifiable health information, a criminal violation of the HIPAA law.

The civil case was investigated by the FDA’s Office of Chief Counsel, HHS Office of Counsel to the Inspector General, and the National Association of Medicaid Fraud Control Units.  The civil settlement was handled by Assistant U.S. Attorneys Sonya Rao and Susan Poswistilo of Ortiz’s Civil Division and Trial Counsel Colin Huntley of the Commercial Litigation Branch of the Justice Department’s Civil Division.

The criminal case was investigated by the FBI, HHS-OIG, the Department of Defense’s Defense Criminal Investigative Service, the FDA’s Office of Criminal Investigations, the Department of Veterans Affairs and the Office of Personnel Management’s Office of Inspector General.  The criminal prosecution of the company was handled by Assistant U.S. Attorneys David Schumacher, Miranda Hooker, Sonya Rao, Susan Poswistilo and Trial Attorney Daniel Baeza of the Consumer Protection of the Justice Department’s Civil Division.  The criminal prosecutions of individuals are being prosecuted by AUSAs Schumacher and Hooker of Ortiz’s Health Care Fraud Unit.  

Healthcare Fraud
Updated April 15, 2016