2009 Cases
Bayer HealthCare, LLC (Bayer) agreed to pay $97.5 million plus interest to settle allegations that it paid kickbacks to several DME mail order suppliers and diabetic supply distributors to induce them to provide Bayer diabetic supplies to Medicare beneficiaries. The Federal Government alleged that this conduct caused the suppliers and distributors to submit false claims to Medicare from January 1998 to December 2007. Bayer also executed a 5-year CIA in connection with the settlement. The CIA, which also applies to Bayer affiliates, includes requirements for increased accountability by Bayer’s board of directors in the form of an annual resolution by the board and annual certifications from managers regarding compliance.
When pharmaceutical companies bribe individual doctors, they gain access to tons of new customers through that doctor's journal articles or through his direct consultation with patients. If they can incentivize high-ranking government officials to look favorably upon their products, they can shape an entire industry: Because of where they come from, the rulings and comments by various high-level committees in the Food and Drug Administration are considered as close to fact as possible. The purity of these rulings, however, was shaken to its core when the inspector general of the Department of Health and Human Services opened an investigation of Janet Woodcook, then director of the FDA's Center for Drug Evaluation and Research. The investigation stemmed from an ethics complaint from Amphastar Pharmaceuticals, Inc., a California-based company claiming that it has been delayed in releasing a generic version of Lovenox, a multi-billion-dollar blockbuster drug made by Sanofi-Aventis SA, because its competitor, Momenta Pharmaceuticals (also trying to release a generic form of Lovenox), had special access to Dr. Woodcock at key moments in the application process. Amphastar focused mainly on an article co-authored by Dr. Woodcock and Dr. Ram Sasisekharan, one of Momenta's founders, which brought favorable press to the company and increased its stock an astounding 17% in one day.
Daneil Schultz, the top medical-device regulator in the FDA, resigned in August 2009 in response to critics claiming the government official was far too friendly towards industry in his device-approval process. In 2007 Schultz approved a knee-surgery device made by ReGen Biologics Inc. over the objections of numerous FDA scientists and reviewers. Earlier that year the FDA had decided to re-examine its decision to approve the device, called Menaflex, after its was revealed that the concerns of critics were excluded from the decision-making process and the device was approved using a fast-track method that does not require clinical trials on safety and efficacy.
Usually, pharmaceutical companies will lie to the medical world by hiring "ghost-writers" to produce an article, then paying doctors to sign off on its "authenticity." When this doesn't work, the next best thing may be to create an entirely new publication that looks like a peer-edited journal and calls itself a peer-edited journal when, in fact, it is financed entirely by drug industry money. Merck found itself accused of this very act in 2009 when it was revealed that it had paid an Australian publishing company to produce eight compilations of scientific articles under the title Australasian Journal of Bone and Joint Medicine. The evidence came to light in a lawsuit against the company over its misrepresentation of the safety and effectiveness of Vioxx, as many of the journal's articles approved of the drug while over a dozen more referred positively to another Merck drug, Fosamax.
Biovail paid nearly $25 million in criminal and civil charges after it pleaded guilty to providing illegal kickbacks to encourage physicians to prescribe its blood pressure drug, Cardizem LA. The company allegedly provided payments to "thousands of physicians."
Boston Scientific paid out a $22 million settlement over charges that its Guidant cardiac rhythm unit (purchased by the company in 2006, one year after the federal investigations had begun) had paid kickbacks to doctors to recommend its faulty heart devices that were later recalled. Prosecutors were investigating whether Guidant used illegal kickbacks to incentivize doctors to recommend its Ventak Prizm 2 and Contact Renewal 1 and 2 models.
Contrary to the rest of the stories on this page, drug companies are not always best friends with doctors. In January 2009, UnitedHealth shelled out $350 million to settle lawsuits that claimed that the company shortchanged consumers and physicians when paying for medical services outside its preferred network.
Healthways Inc. shelled out $40 million in 2009 to end a lawsuit alleging that the company's Diabetes Treatment Center of America (DTCA) received kickbacks for paying doctors to send their patients to hospitals that are the unit's clients. These hospitals paid "management fees" so patients would be sent their way. According to the whistleblower suit filed by Scott Pogue, a former company employee, many of the patients were funded by Medicaid, which means that DTCA was guilty of conscientiously defrauding the U.S. government each time it paid doctors to steer the patients toward certain hospitals.