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Related: About this forum$13.4 Million Settlement Of Civil Healthcare Fraud Lawsuit Against US Bioservices Corp.
Department of Justice
U.S. Attorneys Office
Southern District of New York
FOR IMMEDIATE RELEASE
Wednesday, August 23, 2017
Acting Manhattan U.S. Attorney Announces $13.4 Million Settlement Of Civil Healthcare Fraud Lawsuit Against US Bioservices Corp.
Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Scott J. Lampert, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General for the New York Region (HHS-OIG), announced that the United States has settled a civil fraud case against US BIOSERVICES CORP. (US BIO) pursuant to which US BIO will pay a total of $13.4 million. The settlement resolves claims that US BIO violated the Anti-Kickback Statute and the False Claims Act by participating in a kickback scheme with Novartis PharmaceuticalS Corp. (Novartis) relating to the NOVARTIS drug Exjade. Specifically, the United States Complaint alleges that US BIO and NOVARTIS entered into a kickback arrangement pursuant to which US BIO was promised additional patient referrals and related benefits in return for refilling a higher percentage of Exjade than the two other pharmacies that also dispensed Exjade. The settlement will also resolve numerous state law civil fraud claims.
Yesterday, Chief U.S. District Judge Colleen McMahon approved a settlement stipulation to resolve the Governments claims against US BIO. Under the settlement, US BIO is required to pay approximately $10.6 million to the United States and has made extensive admissions regarding its conduct. Further, as part of the settlement, US BIO will pay approximately $2.8 million to resolve the state law civil fraud claims. In prior lawsuits, the Government sued NOVARTIS and the two other pharmacies that participated in this same Exjade kickback scheme. The Government settled those lawsuits, pursuant to which NOVARTIS paid $390 million, the two other pharmacies paid $75 million, and NOVARTIS and the pharmacies made extensive admissions regarding their conduct.
(snip)
As alleged in the Governments Complaint, US BIO participated in a kickback scheme with NOVARTIS that violated the federal Anti-Kickback Statute and the False Claims Act. In connection with this scheme, US BIO submitted claims for thousands of Exjade prescriptions to Medicare and Medicaid, causing those programs to pay out millions of dollars for false claims tainted by kickbacks. As part of the settlement, US BIO admitted as follows:
In December 2005, US BIO signed a contract with Novartis relating to the distribution of Exjade. Under that contract, Novartis agreed that US BIO would be one of three specialty pharmacies (the EPASS pharmacies) permitted to dispense Exjade as part of Novartiss EPASS network. US BIO, in turn, agreed to provide specialty pharmacy services to Exjade patients, including having clinical staff available to speak with patients and to answer clinical questions or concerns about Exjade.
In or about June 2007, Novartis began issuing monthly Exjade Scorecards to US BIO and the other two EPASS pharmacies that measured, among other things, the pharmacies adherence scores. The adherence score in the Exjade Scorecards showed how long Exjade patients continued to order refills, without excluding patients who stopped ordering refills due to side effects or patients who were directed to stop therapy by their physicians. Starting in or about July 2007, Novartis had discussions with US BIO regarding how US BIO could improve its adherence scores in the Exjade Scorecards.
In late 2007 and early 2008, and to improve its adherence score, US BIO trained its nurses to call Exjade patients and tell patients that not treating iron overload, for which Exjade is prescribed, could have severe consequences like organ failure, and that while Exjade had certain common side effects like diarrhea, such side effects typically went away with time. The nurses at US BIO did not use written scripts for the calls with Exjade patients.
In October 2008, Novartis implemented a new plan for allocating Exjade patient referrals among US BIO and the other EPASS pharmacies. Under that plan, Novartis would allocate 60% of all undesignated patient referrals to the EPASS pharmacy with the top adherence scores in the Exjade Scorecards and allocate 20% of the undesignated patient referrals to each of the other two EPASS pharmacies.
(snip)
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