A unit of Bausch & Lomb pled guilty recently to a felony and was excluded from Medicare and Medicaid. A unit of ISTA Pharmaceuticals, Bausch & Lomb, pled guilty to a felony charge of misbranding its eye drug Xibrom. A whistleblower lawsuit filed under the False Claims Act (FCA) got the ball rolling. The whistleblower was represented by Daniel Oliverio, a lawyer with Hodgson Russ, a firm with seven offices, including one in Buffalo, N.Y.
It’s quite apparent that exclusion from federal programs is considered the death penalty for pharmaceutical companies. That’s because they rely on federal payments to keep their record profits rolling in. But in this case, the prospects of a death penalty didn’t matter to Bausch & Lomb. In June 2012, Bausch & Lomb acquired ISTA and under the agreement ISTA is going to transfer its drugs and other assets over to them. Interestingly, there will be no exclusion of Bausch & Lomb under any federal program. Neither were any charges made against Bausch & Lomb. Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services, had this to say:
We agreed to enter into this divestiture agreement based on the facts of this case, including that Bausch & Lomb did not have a corporate relationship with ISTA during the improper conduct. In addition, Bausch & Lomb acquired ISTA more than a year after the improper conduct ended, and Bausch & Lomb did not hire any of ISTA’s executives or senior management.
As part of the ISTA plea agreement, the government agreed not to prosecute Bausch & Lomb. In most of these pharmaceutical cases, only the subsidiaries have been prosecuted, with the parent companies being left alone. That may seem sort of weird, realizing the control a parent company generally has over a subsidiary. Nevertheless, the parent, as a rule, escapes prosecution.
As we have pointed out on numerous occasions, it’s illegal for a drug company to introduce into interstate commerce any drug that the company intends will be used for uses not approved by the Food and Drug Administration. Xibrom is an ophthalmic, nonsteroidal, anti-inflammatory drug that was approved by FDA to treat pain and inflammation following cataract surgery.
ISTA promoted Xibrom for unapproved new uses, including the use of Xibrom following Lasik and glaucoma surgeries, and for the treatment and prevention of cystoid macular edema. ISTA pled guilty to a felony based on evidence that some ISTA employees were told by management not to memorialize in writing certain interactions with physicians regarding unapproved new uses, and not to leave certain printed materials in physicians’ offices relating to unapproved new uses. These instructions were given in order to avoid having their conduct relating to unapproved new uses being detected by others.
ISTA agreed that this conduct represented an intent to defraud under the law and the company also pled guilty to a conspiracy to knowingly and willfully offering or paying remuneration to physicians in order to induce those physicians to prescribe Xibrom. This was in violation of the federal Anti-Kickback Statute. Under that law, it’s illegal to offer or pay remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to physicians to induce them to refer individuals to pharmacies for the dispensing of drugs, for which payments are made in whole or in part under a Federal health care program.
Under the terms of the plea agreement, ISTA will pay a total of $18.5 million, including a criminal fine of $16,125,000 for the conspiracy to introduce misbranded Xibrom into interstate commerce, $500,000 for the conspiracy to violate the Anti-Kickback Statute, and $1,850,000 in asset forfeiture associated with the misbranding charge. ISTA also entered into a civil settlement agreement under which it agreed to pay $15 million to the federal government and states to resolve claims arising from its marketing of Xibrom, which caused false claims to be submitted to government health care programs. The civil settlement resolves two lawsuits filed under the whistleblower provisions of the False Claims Act (FCA) by Keith Schenker. The whistleblower will receive $2.5 million from the federal share of the civil recovery.
Source: Corporate Crime Reporter
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