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In a whistleblower suit that began in Philadelphia, federal prosecutors in Boston announced Wednesday that TAP Pharmaceuticals Inc. has agreed to pay $875 million to settle claims that it paid kickbacks to doctors and coached them to cheat Medicare to promote a prostate cancer drug. Attorney Elizabeth K. Ainslie of Schnader Harrison Segal & Lewis in Philadelphia filed the qui tam suit on behalf of Douglas Durand, a former TAP vice president of sales. As a reward for uncovering the scam, the government has agreed to pay Durand 14 percent of the $559.5 million Medicare portion of the settlement, or more than $78 million. Qui tam suits, which blow the whistle on alleged False Claims Act violations that cheat the government, are automatically filed under seal and referred to the U.S. Attorney’s Office. If the government opts not to press the case, the whistleblower, or “relator,” has the right to press it himself. Durand’s case was originally filed in Philadelphia but was transferred to Boston when prosecutors there began pursuing a later case brought by a second whistleblower. Dr. Joseph Gerstein told prosecutors that he was approached by a TAP marketer who said she noticed that Gerstein had stopped using TAP’s drug, Lupron, and instead was giving his prostate cancer patients Zoladex, a competing drug made by Astra-Zeneca. Gerstein said the marketer offered to give him an unrestricted educational grant of $25,000 if he would agree to switch back to Lupron. At first, Gerstein refused, but when he reported the incident to prosecutors, a sting operation was arranged in which Gerstein captured the marketer on videotape making the same offer. In Wednesday’s settlement, Gerstein will receive 3 percent of the Medicare portion, or more than $16 million. No reward is paid out from the $25.5 million Medicaid portion of the settlement, which will be passed on to state governments. Durand’s suit alleged a much broader scheme in which TAP marketers often gave doctors free samples of Lupron and encouraged them to profit from them by billing Medicare and Medicaid at $500 per dose. Ordinarily, prescription drugs are not covered by Medicare, but Lupron, which is injected in the doctor’s office, is covered as a cancer treatment. In the highly competitive world of pharmaceuticals, Lupron was a major success, enjoying an 85 percent market share. Patients preferred Lupron, which is injected into the buttocks, over Zoladex, which is injected with a larger needle into a more sensitive spot, the abdomen. Both drugs serve as alternatives to surgery. But Durand’s lawsuit alleged that TAP — which stands for Takeda Abbott Pharmaceuticals, a joint venture of Abbott Laboratories in Illinois and Takeda Chemical Industries in Japan — had gone to extreme lengths to protect its dominant market share. The suit alleged that TAP routinely gave doctors free samples of Lupron if they agreed to stop using Zoladex. The company then encouraged the doctors to reap huge profits from the free samples by billing the government, the suit said. “They were not only ripping off Medicare, they were also distorting the judgment of the doctors,” Ainslie said. Ainslie said that four doctors had pleaded guilty to charges of filing false claims. Wednesday seven TAP executives were charged. TAP has also agreed to plead guilty to a criminal charge of violating the Prescription Drug Marketing Act. The settlement breaks down to: � $290.0 million to pay a criminal fine for violating the PDMA. � $559.5 million to settle federal fraud charges for overcharging Medicare. � $25.5 million paid to 50 states and the District of Columbia for filing false claims with the states’ Medicaid programs. In a related action, Jeffrey L. Kodroff, a partner with Philadelphia’s Spector Roseman & Kodroff, filed a class action suit in Boston Wednesday on behalf of senior citizens who subscribe to Medicare Part B and take Lupron. The suit names TAP, Abbott Labs and Takeda. Under Medicare Part B, the government picks up the cost for 80 percent of Lupron, with the patient paying the additional 20 percent through a co-payment. The suit seeks repayment of the 20 percent co-payment. Kodroff said that because of the inflated price of the drug, Medicare Part B patients paid as much as $35 million more in co-payments than they should have over the last three years.

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