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A Pennsylvania whistleblower’s allegations of corrupt sales practices in the pharmaceuticals industry have resulted in more than $1.2 billion in settlements with Uncle Sam — and rewards of more than $110 million to the whistleblower. In a settlement announced Friday, AstraZeneca Inc. agreed to pay nearly $280 million in civil penalties to the federal government and an additional criminal fine of more than $63 million to resolve allegations of Medicare fraud. Friday’s settlement stemmed from the same whistleblower suit that resulted in an October 2001 settlement in which TAP Pharmaceuticals Inc. 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. The suit was originally filed in Philadelphia by attorney Elizabeth K. Ainslie of Schnader Harrison Segal & Lewis on behalf of Douglas N. Durand, a former TAP vice president of sales. Such lawsuits, called “qui tam” actions, are initially filed under seal to allow federal prosecutors the option of taking the case up for criminal or civil investigation under the False Claims Act. In Durand’s case, prosecutors in Philadelphia sent the case on to two other offices — the U.S. Attorney’s Offices in Boston and Wilmington, Del. The allegations against TAP were investigated in Boston, where prosecutors were also 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 AstraZeneca. 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 the 2001 settlement, Durand was paid a reward of 14 percent of the $559.5 million Medicare portion of the settlement, or more than $78 million, and Gerstein received 3 percent of the Medicare portion, or more than $16 million. No reward was paid from the $25.5 million Medicaid portion of the settlement that 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 extremes 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. Last week’s settlement stemmed from very similar allegations Durand made that Zeneca Inc., the predecessor of AstraZeneca, had paid “illegal remunerations” to physicians and others in marketing its prostate cancer drug Zoladex. The suit alleged that Zeneca not only gave out free samples of the drug, but also offered unrestricted educational grants, business assistance grants and services, travel and entertainment, consulting and audit services, and honoraria to increase sales. Federal prosecutors in Delaware alleged that Zeneca made the remunerations, knowing that Zoladex was being paid for by Medicare and other federal reimbursement programs. Prosecutors also said Zeneca had “marketed the spread” between the amount Medicare was willing to reimburse doctors for Zoladex and the discounted price to physicians offered by Zeneca and had falsely advised physicians that the discounted price should not be reported to Medicare. Ainslie said Durand, who was TAP’s national vice president of sales between 1995 and 1996, had learned directly about TAP’s illegal sales practices and indirectly about those of Zeneca, TAP’s main competitor in the prostate cancer drug market. “I think this is a once-in-a-lifetime thing,” said Ainslie, “not only for Doug and me, but also for whistleblowers under the False Claims Act generally.” Ainslie said Durand’s whistleblowing “drew our attention to a huge problem that many in the world of pharmaceutical sales had come to accept as normal.” As for the windfall profits Durand now enjoys as a reward, Ainslie said she considers it a rare event, but perfectly appropriate. “Doug’s financial recovery from this lawsuit has been substantial, but I genuinely believe that it is warranted by the courageous stand he took and the benefit that his revelations conferred, and will continue to confer, on the public that ultimately pays for Medicare and Medicaid,” Ainslie said. Ainslie declined to comment on how much her own fee would be but said, “Let’s just say I’m a very popular person around the Schnader firm right now.”

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