The U.S. Department of Justice (DOJ) announced on July 18, 2013 that pharmaceutical manufacturer Mallinckrodt LLC agreed to pay $3.5 million to settle a civil False Claims Act suit. The complaint alleged that Mallinckrodt paid illegal kickbacks to health care professionals in the form of speaker honoraria, clinical trials funding, and honoraria for consulting activities, and that these illegal kickbacks caused the submission of false and tainted claims to federal health care programs. The investigation arose from a whistleblower suit filed by a former Mallinckrodt employee in April 2008. The investigation was conducted by the U.S. Attorney’s Office for the Northern District of California, the U.S. Department of Health and Human Services Office of Inspector General (OIG), U.S. Food and Drug Administration (FDA) Office of Criminal Investigations (OCI), the Federal Bureau of Investigation (FBI), and the National Association of Medicaid Fraud Control Units (NAMFCU).
Novartis Pharmaceuticals announced in a July 2013 U.S. Securities and Exchange Commission (SEC) filing that it received a civil investigative demand (CID) from the U.S. Attorney’s Office for the Southern District of New York “requesting the production of documents and information relating to marketing practices for Gilenya, including the remuneration of healthcare providers in connection therewith.” This CID follows on the heels of two other investigations into Novartis’ marketing practices announced in April 2013. On July 18, 2013, a US District Court judge ordered the DOJ to amend one of these April 2013 complaints to allege with additional specificity how the alleged kickbacks from Novartis to federal health care programs resulted in false claims to federal health care programs. The DOJ must amend the complaint by August 19, 2013.
Aveo Pharmaceuticals announced in a July 2013 SEC filing that it received a subpoena from the SEC “requesting documents and information concerning tivozanib, which the [FDA] declined to approve for the treatment of patients with advanced renal cell carcinoma on June 10, 2013, including related communications with the FDA, investors and others.”
On July 15, 2013, the Chinese government accused four senior GlaxoSmithKline executives of using local travel agencies to bribe health care professionals, medical institutions, medical associations and government officials to increase product sales. The government stated that the senior executives confessed to the misconduct.
On July 16, 2013, an indictment was filed in the U.S. District Court for the Western District of Texas against the former CEO and former CFO of ArthroCare. The government alleges that these executives worked with other senior company employees to falsely inflate sales and revenue data by end-of-quarter shipments to distributors designed to meet sales expectations rather than actual demand, and took actions to hide the true nature of these transactions. The 17 count indictment alleges conspiracy, wire fraud, securities fraud and making false statements. In addition to potential criminal penalties of prison and fines, the government is seeking forfeiture of assets traceable to the commission of the offenses.