State to Share in Drug Company Settlement

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The state of Indiana will receive more than $660,000 from a pharmaceutical industry settlement. A multi-state lawsuit against Wyeth Pharmaceuticals Inc. claims the drug-maker defrauded the Medicaid program. July 30, 2013

News Release

INDIANAPOLIS, Ind. - The State of Indiana will recover more than $663,000 as its share of a $491 million civil and criminal settlement that drug manufacturer Wyeth Pharmaceuticals, Inc. reached with various states and the federal government to resolve allegations of fraud against the Medicaid program, Indiana Attorney General Zoeller announced today.

Zoeller said Indiana will receive $663,282.71 to resolve lawsuits alleging Wyeth illegally promoted the use of its kidney-transplant drug Rapamune for unapproved uses, causing the Indiana Medicaid program to be wrongly billed for ineligible claims for the drug that must be repaid. The civil settlement is based on two whistleblower lawsuits filed under the federal and state versions of the False Claims Act that exposed Wyeth’s illegal drug marketing practices, and the whistleblowers will be eligible to receive a portion of the recovery.

In total, Wyeth has agreed to pay the states and federal government a combined $257.4 million in civil damages and penalties, including more than $60.1 million for state-and-federal Medicaid programs, to resolve the civil allegations of illegal off-label marketing. Wyeth also pleaded guilty in federal court to a federal criminal violation of the U.S. Food, Drug and Cosmetic Act, and will pay $233.6 million in criminal fines and forfeitures.

"When drug companies ignore laws about promoting prescription drugs for unapproved uses so that Medicaid is wrongly billed for ineligible claims, it is an affront to taxpayers, consumers and patients alike. Through the False Claims Act, whistleblowers who have the courage to expose illegal conduct by drug companies can share in the recovery; and it is an effective tool we have used to recover and return millions of dollars to the Indiana Medicaid program," Zoeller said.

The drug Wyeth produced, Rapamune, is FDA-approved for prescribing to kidney transplant patients to prevent the body from rejecting a transplanted organ. The investigation by the U.S. Department of Justice and several states, however, found that Wyeth promoted Rapamune to physicians for uses the FDA had not approved, such as for liver transplants or for patients already on different immunosuppressant drugs where taking Rapamune in combination with them would not be not safe or effective.

Though it is not illegal for physicians to prescribe drugs for conditions not FDA approved, it is illegal for drug companies to promote or market such drugs for “off-label” uses to increase their sales or Medicaid reimbursements. The federal-and-state investigation found that starting in 1999, Wyeth directed and encouraged its Rapamune sales team to market the drug to providers for off-label uses, which in turn meant the Medicaid program received ineligible claims for payment for the drug that were reimbursed.

In the federal criminal case, Wyeth pleaded guilty today in U.S. District Court for the Western District of Oklahoma to introduction into interstate commerce of a misbranded drug, in violation of the U.S. Food, Drug and Cosmetic Act.

A Delaware corporation headquartered in Collegeville, Penn., Wyeth was acquired in 2009 by Pfizer, Inc. The illegal off-label marketing and the conduct to which Wyeth pleaded guilty occurred prior to Pfizer’s acquisition of Wyeth, and Pfizer cooperated fully with the federal government and states, the multistate investigation team announced. Funds that Indiana recovers through the civil settlement will go back into Medicaid to fund future Medicaid services.

Since January 2009, the Attorney General’s Medicaid Fraud Control Unit has joined in 24 settlements of whistleblower lawsuits against drug manufacturers for illegal off-label marketing that has resulted in recovery of $37.8 million, the state’s share, for the Indiana Medicaid program.

As part of a public awareness effort called “Blow the Whistle on Fraud," deputy attorneys general from the Medicaid Fraud Control Unit (MFCU) of Zoeller’s office have spoken to groups of workers from the health care industry to explain their legal rights as whistleblowers under the False Claims Act. If a whistleblower files a qui tam lawsuit alleging fraud on a government contract, then under the False Claims Act the whistleblower is eligible for a percentage of any damages or settlement recovered at the end of the litigation. The whistleblowers in the Wyeth case will be eligible for a portion of the national settlement funds, not yet calculated.

"Whistleblowers who file these type of lawsuits exposing fraud against Medicaid are typically company insiders, and the False Claims Act provides them a percentage of settlement funds as a reward for their hardship in bringing a lawsuit against their employer and to help them transition into new employment," Zoeller said.

To learn more about how whistleblowers can file suit under the False Claims Act, visit this link:

http://www.in.gov/attorneygeneral/2807.htm

Members of the public can report fraud against the Medicaid program or Medicaid patient abuse and neglect by contacting the Attorney General’s Medicaid Fraud Control Unit at (800) 382-1039.

Source: The Office of the Indiana Attorney General