Kickback on Kickbacks

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It is encouraging to read reports of the U.S. government bringing down the hammer on companies that commit multi-million dollar fraud—especially when their crimes could cause direct physical harm or death to unsuspecting citizens. According to a press release recently published by the Justice Department, a New Jersey-based pharmaceutical company is on the hook for bribing doctors, engaging in unethical marketing practices and defrauding the Department of Veterans Affairs, Medicaid and other insurance providers, in an attempt to get a hedge on the prescription drug market.

It was discovered that, over a four-year span of time, this particular pharmaceutical company held ”Medical Education Events” that essentially acted as a vehicle to pay off doctors so they would favor its drugs over others when they wrote prescriptions for patients. During these events, which were often held at pricey restaurants and rarely offered true educational value, the company provided physicians with meals, payments and other incentives. At times, it directly courted ”high-prescribing” physicians to act as the company’s brand ambassadors, soliciting them to become speakers for the purpose of obtaining prescriptions. (”It’s easy. Just read what’s on the teleprompter and pick up your ‘speaking fee’ on the way out.”)

In an even grander attempt to side-step federal restrictions preferable to competitors, the company submitted deceptive requests for prescription authorizations to federal health care programs, submissions that intentionally falsified certain patients’ medical histories and needs. In some instances, members of its sales team cut out doctors from the equation entirely and misrepresented themselves as physicians in order to directly submit prior authorizations. (”I’m not a doctor, but I play one in real life.”)

The company also engaged in direct, unethical drug-marketing practices by asserting that their drugs were more effective than those sold by competitors, even though no clinical evidence existed to support such claims. (”Evidence, schmevidence. We can charge more if we say it’s better.”)

A joint criminal investigation among numerous federal agencies resulted in criminal charges being brought against the company and participating individuals. A criminal plea agreement requires the company to pay roughly $23 million in fines, to forfeit $2 million related to illegal drug promotion and to pay nearly $200,000 in restitution to private insurance companies it defrauded.

A separate joint civil investigation resulted in a settlement of more than $102 million the company must pay the government for the false claims it submitted to public health care programs: $91.5 million to the federal government, and $10.6 million to the state Medicaid program.

As demonstrated by the massive financial penalties imposed on this company (a total of $125 million in case you weren’t counting), brought about by collaboration among numerous federal and state agencies and jurisdictions, the government is sending a clear message to pharmaceutical companies: ”the government will take action and hold companies accountable when they prioritize profits over patient care.”

Source: Today’s ”Fraud of the Day” is based on, ”Warner Chilcott Sentenced to Pay $125 Million for Health Care Fraud Scheme,” a press release published by the U.S. Department of Justice on April 15, 2016.

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.