LITIGATION ROUND-UP

Litigation Round-up

Settlements & Resolutions

GlaxoSmithKline (GSK) agreed to pay $105 million to resolve allegations that it illegally marketed its asthma drug Advair and its antidepressants Paxil and Wellbutrin for uses not approved by the US Food and Drug Administration (FDA) in violation of state consumer protection laws.  The multi-state settlement included 44 states and the District of Columbia.  In a separate settlement with the West Virginia Attorney General, GSK also agreed to pay $22 million to settle allegations that the company engaged in an illegal marketing campaign to promote diabetic drugs Avandia, Avandamet and Avandaryl.

The Department of Justice (DOJ) announced that it has approved a $124 million settlement with Omnicare Inc. to settle two whistleblower False Claims Act (FCA) suits accusing the pharmaceutical provider of providing “prompt pay” discounts to nursing homes in exchange for drug referrals, a practice known as “swapping.”

The DOJ announced that Medtronic Inc. agreed to pay $9.9 million to settle a FCA suit alleging that the company offered illegal kickbacks to physicians to implant its pacemakers and defibrillators.  The suit alleged that Medtronic paid implanting physicians to speak at events in order to boost referrals; provided tickets to sporting events; developed business and marketing plans for physicians at no cost; and promoted off-label uses of the cardiac devices.  The whistleblower complaint was filed in early 2009 by a former Medtronic business development manager.

Medical device companies Stryker Corp. and Alliant Enterprises LLC agreed to pay a combined $1.05 million to settle a whistleblower suit accusing them of conspiring to hide pricing information from the U.S. Department of Veterans Affairs (VA).  Stryker paid $911,000 and Alliant paid $151,00 to settle allegations that Alliant resold critical-care hospital beds and other medical equipment manufactured by Stryker.  The government alleged that Alliant represented itself as the manufacturer in order to avoid providing pricing history for the products, causing the VA to buy the products at inflated prices.

Hi-Tech Pharmaceuticals Inc. and three of its directors were ordered to pay more than $40 million in sanctions to consumers and to recall four of its products with labels that falsely advertise that its dietary supplements cause substantial weight loss.  The court concluded that the company and directors disseminated print advertisements for Fastin, Lipodrene, Benzedrine and Stimerex-ES through national magazines and its website with claims that violated a 2008 permanent injunction for making claims that were not substantiated by competent or reliable scientific evidence.

Investigations & Other Litigation

Boston Scientific announced in a SEC filing that it received a subpoena from the U.S. Department of Health and Human Services Office of Inspector General (OIG), seeking details related to the launch and performance of the Cognis and Teligen line of defibrillator devices for certain years, as well as information regarding the operation of the company’s physician guided learning program.

St. Jude Medical announced in a SEC filing that it was received a Civil Investigative Demand (CID) from the Civil Division of the DOJ stating that it was investigating the company for potential FCA violations related to allegations that certain health care facilities and a physician group may have submitted false claims to federal health care programs as a result of alleged inducements paid by the company to implant the company’s cardiac devices.

A qui tam complaint unsealed against Forest Laboratories alleged that Forest regularly markets Namenda to treat mild Alzheimer’s disease, an off-label indication not approved by the government.  The whistleblower was a former sales representative of 15 years.  The government declined to intervene in the suit.

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