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$24.9 Million Settlement with Biotechnology Company Amgen, Inc. Resolves South Carolina False Claims Act Lawsuit

PRESS NOTICE
BILL NETTLES
UNITED STATES ATTORNEY
DISTRICT OF SOUTH CAROLINA
1441 Main Street, Suite 500 * Columbia, SC 29201 * (803) 929-3000

April 16, 2013
FOR IMMEDIATE RELEASE
CONTACT PERSON: Fran Trapp
(803) 929-3000
Fran.Trapp@usdoj.gov

COLUMBIA, South Carolina —-United States Attorney Bill Nettles announced a $24.9 million settlement with Amgen, Inc., a California based biotechnology company. Amgen, Inc. agreed to the settlement to address allegations it paid kickbacks to long-term care pharmacy providers Omnicare Inc., PharMerica Corporation, and Kindred Healthcare Inc. in return for implementing “therapeutic interchange” programs that were designed to switch Medicare and Medicaid beneficiaries from a competitor drug to Aranesp. The Government alleged that the kickbacks took the form of performance-based rebates on Aranesp. As part of that program, the Government alleged that Amgen distributed materials designed to recommend Aranesp’s use in patients who did not have “anemia associated with chronic renal failure,” as specified in the approved labeling for Aranesp.

The Government alleged that the kickbacks took the form of performance-based rebates on Aranesp.

The District of South Carolina began investigating these False Claims Act allegations in the summer of 2010. In particular, the investigation focused on whether Aranesp was marketed to patients, many of whom were in skilled nursing facilities, who did not have “anemia associated with chronic renal failure.”

The False Claims Act allows the government to bring civil actions against entities that knowingly use or cause the use of false documents to obtain money from the government or to conceal an obligation to pay money to the government. The lawsuit in this case was initially filed by an Amgen employee under the qui tam or whistleblower provision of the False Claims Act. This provision entitles a private person to bring a lawsuit on behalf of the United States, where the private person has information that the named defendant has knowingly violated the False Claims Act. Under the False Claims Act, the private person, also known as a “whistleblower,” is entitled to a share of the government’s recovery. In this matter, the whistleblower shall receive over $3 million from the proceeds of the settlement.

“By this agreement we are making important strides in holding drug manufacturers accountable for fraudulent and abusive practices not only in South Carolina, but nationwide. I am proud of the tireless work of this office to investigate this case across the country,” said U.S. Attorney Nettles.

This settlement was the result of a coordinated effort by Assistant United States Attorneys Fran Trapp and James Leventis of the U.S. Attorney’s Office for the District of South Carolina, along with the Commercial Litigation Branch of the Justice Department’s Civil Division, FDA’s Office of Inspector General, HHS’s Office of Inspector General, and Defense Criminal Investigating Service, who diligently worked to investigate the allegations and litigate the case.

The whistleblower was represented by South Carolina attorney Richard Harpootlian along with Reuben Guttman and Traci Buschner, of Guttman, Buschner & Brooks PLLC.

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Guttman and Buschner Represent Key Whistleblower in Justice Dept.’s $1.04 Billion Civil Settlement with GlaxoSmithKline

Reuben Guttman led team on behalf of a former GlaxoSmithKline Therapeutic Sales Manager who alleged misrepresentation in promotion of company’s asthma/COPD drug Advair; firm’s third major whistleblower recovery in 2012, following Abbott Labs’ $1.6 billion settlement and banks’ $25 billion payment over ‘robo-signing’ mortgage fraud. 

BOSTON and WASHINGTON (July 2, 2012) — Reuben Guttman of Guttman, Buschner and Brooks PLLC has represented one of several key whistleblowers behind a $1.04 billion settlement announced today between drug maker GlaxoSmithKline and the U.S. Department of Justice stemming from alleged marketing abuses of various GSK medications. Lois Graydon, is a nursing professional and former GSK Therapeutic Sales Manager.

The U.S. Attorney’s office in Boston led the investigation into promotional tactics behind a total of nine GSK drugs. An accompanying criminal component of the case is expected to substantially increase the sum of the recovery.

Reuben Guttman and Traci Buschner are counsel to Lois Graydon, a registered nurse. She is one of the “relators” who alleged that GSK made false and misleading statements about Advair’s safety and efficacy, thus enabling false or fraudulent claims to Medicare, Medicaid, and other reimbursement programs.

Advair’s share of the recovery – more than $700 million – amounts to over half of the total civil settlement of $1.04 billion.

“The False Claims Act plays an important role in health industry compliance enforcement; health care is an issue that touches everyone and oversight, diligence and transparency are critical,” said Mr. Guttman, one of the country’s leading whistleblower attorneys.

“It is important that the medical community pays attention to this settlement and others and asks critical questions about the scientific support for the use of prescription drugs,” he added.

“In this election year, the safety of pharmaceuticals and their cost to the health care system should be front and center,” Mr. Guttman said.

He added, “Whistleblowers play an important role in compliance enforcement of our laws. We were proud to have represented one of the whistleblowers on this important case under the False Claims Act.”

 

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Guttman and Buschner Represents Lead Whistleblower in $1.6 Billion Settlement with Abbott Laboratories

Payment may be largest ever in single-drug case in history of False Claims Act; 4 ½ year investigation revealed Depakote was illegally marketed for children and geriatric patients; doctors given kickbacks

WASHINGTON, DC (May 7, 2012) – U.S. Justice Department and several state Attorneys General, has reached a $1.6 billion settlement with Abbott Laboratories over its illegal marketing of antiepileptic medication Depakote to children and geriatric patients.

The settlement was reached between Abbott (NYST: ABT) and the Justice Department, along with attorneys general in numerous states who have been conducting a 4 ½ year investigation into the Chicago-based pharmaceutical manufacturer. Prosecutors accused Abbott of violating federal FDA regulations and federal and state false claims act laws in its marketing of Depakote, a powerful anti-seizure medicine.

Abbott’s payment is one of the largest ever in the history of the False Claims Act, which includes $800 million in civil payments, along with a $700 million criminal penalty, and an additional $100 million to settle state consumer protection claims, for a total of $1.6 billion. Meredith McCoyd, a former top-performing Abbott sales representative based in Atlanta, who was the first to come forward with allegations regarding Depakote. Ms. McCoyd is the lead whistleblower relator, whose complaint initiated the government’s investigation of Abbott. The Justice Department intervened in her case last year.

Ms. McCoyd’s case, originally filed under seal in 2007 in the U.S. District Court for the Western District of Virginia, alleged use of illicit incentive payments by Abbott to physicians to encourage prescription writing of Depakote, as well as misrepresentations of the drug’s safety and efficacy, and off-label marketing. Abbott reportedly generated over $1.4 billion per year in sales of Depakote throughout the 2000s before the drug went off-patent.

The settlement stems from charges that over a period of years Abbott instructed its national sales team to market Depakote for treatments outside the FDA’s approved usage, which includes use for treating epileptic seizures, migraines and bipolar mania in adults. Among other illegal ploys, Abbott was accused of heavily marketing the drug to nursing homes as a method of sedating elderly residents, including those with Alzheimer’s and dementia and, in the process, allowing nursing home facilities to maintain lower staff-to-patient ratios. Abbott was also charged with encouraging doctors to prescribe the drug to young children outside of its FDA approved label for epilepsy and migraines.

Abbott was further accused of misrepresenting the safety and efficacy of Depakote, which can have serious side effects, including somnolence and increased risk of falls in the elderly and polycystic ovary syndrome in teenage girls. The company was charged with providing kickbacks to doctors and making misrepresentations to nursing homes about the reporting requirements for Depakote under the Omnibus Reconciliation Act.

According to Ms. McCoyd’s complaint: “This case is about a company – Abbott Laboratories – that methodically and recklessly endangered this vulnerable population – those with Alzheimer’s and other forms of dementia – through the illegal marketing of a drug that Abbott knew was unapproved for the treatment of Alzheimer’s, did not work to treat the disease, and was actually dangerous for use by the elderly. Incredibly, Abbott did not limit its wrongful conduct to preying upon the elderly; it also unlawfully marketed Depakote, to an array of patient populations, including children, placing them at risk for life altering injury or illness.”

“The size of this settlement demonstrates the seriousness of Abbott’s illegal actions. The company placed vulnerable elderly and pediatric patients at extreme risk by marketing Depakote for purposes not approved by the FDA and by paying kickbacks to induce doctors to write prescriptions,” said Reuben Guttman. Mr. Guttman and Traci Buschner, of Guttman, Buschner and Brooks PLLC, served as lead counsel for Ms. McCoyd.

“Abbott’s unlawful practices showed how the company elevated aggressive sales and marketing of Depakote over medical decision-making, violating basic norms of health care and ethics. Abbott essentially preyed on two of the most helpless patient populations in children and Alzheimer’s patients,” Mr. Guttman added.

“Abbott directed its sales force to get Depakote widely used in nursing homes, principally to neutralize older patients as a substitute for proper staffing,” Mr. Guttman said. “We are extremely gratified that the Justice Department and participating state AGs ensured that Abbott would pay a significant penalty for its rampant off-label practices.”

“With health care fraud projected to top $60 billion annually, cases such as this should serve as a catalyst for lawmakers to take a hard look at the pharmaceutical industry,” Mr. Guttman continued. “What happened here with Abbott was a train wreck. Now is the time for Congress to create a pharmaceutical and medical device safety and investigation board, which would conduct investigations with an eye toward providing honest information and analysis to practitioners.”

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