Drug Company Agrees to Settle Kickback Claims

According to the Justice Department, the drug company Daiichi Sankyo, Inc. (“Daiichi”) has agreed to settle allegations that it paid illegal kickbacks to physicians in violation of the False Claims Act and Anti-Kickback Statute. Daiichi is the U.S. subsidiary of global pharmaceutical company Daiichi Sankyo Co., Ltd. based in Tokyo, Japan.

According to its website, Daiichi engages in the research, development and marketing of pharmaceutical products and services in over 50 countries and employs more than 30,000 people. Its U.S. headquarters are in Parsippany, New Jersey.

The Justice Department said the claims involved Daiichi’s prescription drugs Azor, Benicar, Tribenzor, and Welchol. Azor, Benicar, and Tribenzor are used in the treatment of high blood pressure. Welchol is used to treat both high blood sugar and high cholesterol in people with Type-2 diabetes and high cholesterol.

In 2010, Kathy Fragoules, a former Daiichi sales representative, filed a whistleblower case under the qui tam provisions of the False Claims Act in the United States District Court of the District of Massachusetts. The whistleblower alleged that Daiichi paid improper remuneration to physicians in the form of lavish dinners and entertainment and speaker fees in violation of the Anti-Kickback Statute.

The Anti-Kickback Statute is a federal statute that prohibits offering or paying anything of value to induce referrals of federal health care program beneficiaries. In this case, it was alleged that Daiichi was making improper payments to physicians to induce them to prescribe its products, namely, Azor, Benicare, Tribenzor, and Welchol. The government contended that each submission made to Medicare and Medicaid for those improperly promoted prescription medications constituted a violation of the False Claims Act.

According to the whistleblower’s complaint, between 2005 and 2011, Daiichi allegedly paid speaker fees to physicians as part of its Physician Organization and Discussion Program. It was alleged that physicians received speaker fees even when they only spoke to members of their own staff in his or her own office.

In addition to a payment of $39 million, Daiichi has agreed to be bound by a corporate integrity agreement with the Department of Health and Human Services-Office of Inspector General. The whistleblower will receive approximately $6 million of the settlement proceeds as her reward under the qui tam provision of the False Claims Act.