On October 29, 2015, the United States announced a $125 million settlement with a subsidiary of pharmaceutical manufacturer Warner Chilcott to resolve a sealed qui tam in United States ex rel. Alexander, et al. v. Warner Chilcott plc, et al., Civil Action No. 11-CA-1121 (D. Mass.). The global settlement consisted of $22.9 million in criminal fines, $102 million to resolve civil claims, and the company pleading guilty in federal district court in Boston to felony health care fraud charges related to its marketing practices for various osteoporosis treatment medications. In particular, the United States alleged that Warner Chilcott paid kickbacks to physicians to induce them to prescribe the company’s osteoporosis drugs and engaged in improper billing practices.
Simultaneous with announcing Warner Chilcott’s resolution of the corporate case, the company’s former president, W. Carl Reichel, was arrested on an indictment charging that he conspired to pay kickbacks to physicians. The Reichel indictment describes the U.S. Department of Justice’s (DOJ’s) allegations that Warner Chilcott sales representatives were directed to entertain health care professionals—in part under the auspices of medical education events—in exchange for increased referrals.
With charges against Warner Chilcott’s former president and a physician who allegedly received illegal kickbacks from the company, last week’s announcement invokes the DOJ’s newly minted guidance articulated in the Yates Memorandum. As we reported last month, the Yates Memorandum outlined DOJ’s vow to more closely focus on individuals in civil and criminal corporate investigations. The DOJ is also touting the resolution of this case as a product of its continued coordination with the U.S. Department of Health and Human Services in the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative.