The Department of Justice (DOJ) announced that Teva Pharmaceuticals and its subsidiary, IVAX, agreed to pay the United States and the State of Illinois $27.6 million to settle claims that the companies violated the False Claims Act by paying kickbacks to a physician to induce the prescription of the anti-psychotic drug, clozapine. The settlement was a result of a lawsuit filed by the United States in 2012.
According to the press release, clozapine is “generally considered a drug of last resort, particularly for elderly patients”, due to its serious potential side effects. The Government alleged that, in 2003, Michael J. Rothstein, a physician, agreed to switch his patients to clozapine in exchange for a one-year “consulting agreement” worth $50,000 from IVAX. Additionally, IVAX provided trips for Rothstein and his family and employees. As a result of the agreement, Dr. Rothstein prescribed clozapine to a number of his elderly patients and became the largest prescriber of the drug in the country. According to the Government, these payments were in violation of the federal Medicare and Medicaid Anti-Kickback Statute and, therefore, resulted in the submission of “thousands” of false claims to Medicare and the Illinois Medicaid program.
The federal Anti-Kickback Statute prohibits bribes, payments, or rewards (directly or indirectly), or the solicitation or offers of such remuneration, in connection with practically every aspect of health care delivery when any portion of those goods or services are paid for with federal dollars. Compliance with the provisions of the Anti-Kickback Statute is a condition of payment for federally-funded programs such as Medicare and Medicaid. Violations of the Anti-Kickback Statute create liability under the False Claims Act when persons or entities submit, or cause others to submit, claims for payment to Medicare or Medicaid with knowledge that the underlying transactions were in violation of the Anti-Kickback Statute’s prohibitions.
The DOJ press release can be found here.
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