Biotech firm Amgen Inc. has agreed to pay $24.9 million to resolve a whistleblower’s claims that it paid kickbacks to pharmacies so that patients in nursing homes would be prescribed its anemia drug.
The case, which involved the U.S. Justice Department, was initiated in the U.S. district court for South Carolina by Frank Kurnik, director of long-term care sales for Amgen from 2002 to 2008. The drug, Aranesp, is one of several on the market used to treat anemia in patients with kidney disease.
Under the settlement, announced on April 16, Amgen will pay $17.8 million to the federal government and nearly $7.1 million to the 49 states and District of Columbia.
The settlement came four months after Amgen reached a separate agreement over its "off-label" sales and marketing practices of various drugs, including Aranesp.
"The South Carolina settlement agreement related primarily to allegations that Amgen’s market share rebate agreements with various long-term care pharmacy providers and the therapeutic interchange programs allegedly instituted by the long-term care pharmacy providers over the early- to mid-2000s did not comply with the safe harbor requirements of the Anti-Kickback statute," Amgen said in a prepared statement, referring to a federal law that imposes civil and criminal penalties on those who pay kickbacks to gain federal healthcare program business. "Amgen denied all of these allegations that were resolved by the settlement."
"We will continue to pursue pharmaceutical companies that pay kickbacks to long-term care pharmacy providers to influence drug prescribing decisions," said Stuart Delery, acting assistant attorney general in the Justice Department’s Civil Division, in a prepared statement. "Patients in skilled nursing facilities deserve care that is free of improper financial influences."
Under the earlier agreement, reached on December 19, Amgen agreed to pay $612 million to resolve civil and criminal claims over the marketing of Aranesp and five other drugs for "off label" uses, or conditions for which the U.S. Food and Drug Administration did not approve the drug.
The payment—the single largest criminal and civil False Claims Act settlement involving a biotechnology company in U.S. history, according to the Justice Department—included $150 million to resolve criminal liability over the marketing of Aranesp. Amgen pleaded guilty in federal court in the Eastern District of New York to a single misdemeanor count of "off label" marketing of the drug. The criminal payment included a $136 million fine and $14 million in forfeiture payments.
Under that agreement, Amgen also agreed to institute a corporate integrity pact with the U.S. Department of Health and Human Services’ Office of Inspector General.
"The government raised important concerns in the criminal prosecution. Amgen acknowledges that mistakes were made, and we did not live up to our standards," Cynthia Patton, senior vice president and chief compliance officer at Amgen, said at the time of the earlier settlement. "This Corporate Integrity Agreement is aligned with the significant changes and enhancements we have made to our compliance program and demonstrates our commitment to fostering a culture of compliance at Amgen."
According to Amgen, the latest settlement resolved one of five whistleblower actions that led to the earlier agreement. But Kurnik’s attorney, Reuben Guttman, a director at Grant & Eisenhofer in Washington, said the case was entirely separate and involved different allegations of kickbacks to nursing homes.
"This involved a separate scheme that was calculated to generate unlawful sales in the nursing home arena, the long term care arena," he said. "And our whistleblower had specific information about Amgen’s agreements with Omnicare, Kindred and PharMerica whereby they basically paid kickbacks to them in order to generate sales in that arena."
By targeting patients in nursing homes, he said, Amgen marketed its drug to a "very vulnerable population."
Guttman, whose firm has contributed to two settlements worth more than $1 billion each during the past year with whistleblower cases against Abbott Laboratories and GlaxoSmithKline LLC, called on Congress to begin investigating drug companies.
"When you have a drug company that makes a product that doesn’t work, or has made misrepresentations about the drug, or paid kickbacks to get the drug used, there needs to be an independent investigation and report by an independent agency to explain what happened," he said.
Kurnik, also represented by Richard Harpootlian, a solo practitioner in Columbia, S.C., brought his whistleblower case under the U.S. False Claims Act and various state laws, alleging that Amgen paid the kickbacks as part of a scheme that lasted from September 1, 2003, to December 31, 2011.
The Justice Department alleged that Amgen paid kickbacks to Omnicare Inc., PharMerica Corp. and Kindred Healthcare Inc.—all providers of pharmacies in nursing homes and skilled nursing facilities—so that they would recommend Aranesp to patients. The kickbacks included rebates, grants, speaker fees, consulting services, dinners and travel. Amgen also allegedly distributed materials to consulting doctors and nursing home staff to encourage them to prescribe Aranesp to patients who did not have anemia symptoms or to those who had been taking a competitor’s anemia drug.
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