We learned about Anti-kick back laws that help to avoid companies buying referrals through rewards and services. Are there any recent examples that you can name of medical device companies that suffered from kickback allegations?
I'll give one: http://www.startribune.com/may-29-kickback-charges-cost-medtronic-9-9m/260978651/
Medtronic was accused of paying doctors for using its defibrillators and pacemakers. Kickbacks included “gifts of wine and alcohol” and “trips to strip clubs.” The StarTribune article was dated 2014 and shows that anti-kickback laws are ways away from truly being effective. This case was settled after a $9.9 million payment.
I actually found a recent example of kickback allegations. The company is called Tenet Healthcare- a healthcare services company headquartered in Texas. The prenatal clinics allegedly referred undocumented Hispanic women to Tenet hospitals, which charged Medicaid for deliveries. The hospitals used contracts for translation and other services to pay the prenatal clinics illegal kickbacks, according to allegations. In the end, they agreed to pay $514 million dollars in settlements.
I know a lot of folks in the medical field, and unfortunately the medical industry is riddle with kick backs. Just about all company's are guilty of this in one form or another. As you will find, some companies are just more clever than others at covering how the kickback scheme works.
I don't think you have to go too deep into kickback allegations to find some really high profile cases. Take this case with Senator Robert Menendez and his Floridian eye doctor associate.
Where Senator Menendez was indicted on 14 counts of using his influence to help a Florida eye doctor in exchange for lavish vacations, campaign donations, etc.
As Juan mentioned, it was pretty easy to dig up an example of a kickback allegation that occured within the pharmaceutical/medical/device industries.
Check out this example: http://www.nytimes.com/2013/04/28/opinion/sunday/another-alleged-drug-kickback-scheme.html
In this example, Novartis Pharmaceuticals enticed doctors to prescribe their medicine for off-label purposes by providing them with entertainment, gifts and appointments on advisory boards. This only occurred a few years ago. Its interesting to me that this occurs so often, considering how aware everyone (including the general public) is of this issue. This explains why at least at my company (a major pharma company), we are required to take online training programs every so often that explain these issues and advise us how to avoid them.
Another example of a kickback allegation that I found, was the $3 billion settlement agreement that GlacoSmithKline(GSK)- a British pharmaceutical and the world's sixth pharmaceutical company- had to agree to in 2012. Besides the criminal plea agreement on off-label uses and safety data omissions, under their civil settlement agreement, the pharmaceutical company was accused of paying kickbacks to health care professionals to induce them to promote and prescribe these drugs as well as the drugs Imitrex, Lotronex, Flovent and Valtrex. Practically, they paid millions of dollars to doctors to speak at and attend meetings, sometimes at lavish resorts, at which the off-label uses of Wellbutrin were routinely promoted and also used sales representatives, sham advisory boards, and supposedly independent Continuing Medical Education (CME) programs to promote Wllbutrin for these unapproved uses.
Besides the $3 billion, the pharmaceutical company had to execute a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services, Office of Inspector General (HHS-OIG). The plea agreement and CIA include novel provisions that require that GSK implement and/or maintain major changes to the way it does business, including changing the way its sales force is compensated to remove compensation based on sales goals for territories, one of the driving forces behind much of the conduct at issue in this matter.
https://www.justice.gov/opa/pr/glaxosmithkline-plead-guilty-and-pay-3-billion-resolve-fraud-allegations-and-failure-report
In January, the former owner and the former operator of a California durable medical equipment company were sentenced for paying physicians kickbacks for patient referrals and prescriptions for unnecessary equipment — primarily power wheelchairs — which were used to support fraudulent Medicare claims.
The following is the link to the Article:
http://www.healthcaredive.com/news/recognizing-and-preventing-medical-device-fraud/430686/
In terms of kickbacks, maybe a lot of these happen because some people may not think it is a big deal to accept to those things. Maybe it is just thought of as the cost of doing business in the field, and that has almost become a norm. Since it has been happening for a long time, those people in the industry have just become desensitized and that's just the way some people do business. Like it was said before, some companies are just better at hiding it than others.
I was able to find a kickback allegation that happened very recently, this past September 2017. It involves Galena Biopharma with a prescription opioid scheme. Galena Biopharma had to pay more than $7 million in the settlement. Two of the doctors involved actual went to jail for over 20 years. The doctors were prescribing these opioid drugs to people who did not need that in exchange for money. The article is pretty interesting please see the link below:
http://www.raps.org/Regulatory-Focus/News/2017/09/08/28439/Galena-Biopharma-Settles-Opioid-Kickback-Allegations/
Even though this article is dated 2009, Pfizer was asked to pay $2.3 billion dollars to settle allegations of kickbacks in off-label marketing campaign. Per the article 49 states and the federal government reached the largest-ever settlement at the time over allegations of healthcare fraud. Pfizer Inc settled civil and criminal allegations that Pfizer and its subsidiaries paid kickbacks and engaged in off-labeling marketing campaigns that improperly promoted numerous drugs that the company manufactured
I found too many companies charged for illegal kickbacks violations for example:
1- In North Carolina, Minneapolis-based Cardiovascular Systems, Inc. (CSI), has agreed to pay $8 million to resolve allegations that it paid illegal kickbacks to induce physicians to use the company’s medical devices from kickback allegations. As we learned " The federal anti-kickback statute proscribes the offering, payment, solicitation or receipt of any remuneration in exchange for a patient referral or referral of other business for which payment may be made by a federal health care program, including Medicare and Medicaid."
2- Olympus Corp. of the Americas (OCA) was charged in a criminal complaint filed in Newark, New Jersey, federal court with conspiracy to violate the Anti-Kickback Statute (AKS), which prohibits payments to induce purchases paid for by federal health care programs.For example:
- OCA gave a hospital a $5,000 grant to facilitate a $750,000 sale.
- OCA held up a $50,000 research grant until a second hospital signed a deal to purchase Olympus equipment.
- OCA paid for a trip for three doctors to travel to Japan in 2007 as a quid pro quo for their hospital’s decision to switch from a competitor to Olympus.
(As we learned :Modest gifts (under $100) are ok, IF they serve an educational purpose or help in the doctor’s practice)
- A doctor with a major role in a New York medical center’s buying decisions received free use of $400,000 in equipment for his private practice.
(As we learned Ok to provide modest meal for a physician while discussing product info, contracts, etc. but NOT free use of $400,000 equipment in his private practice!!)
Eli Lilly Co was involved in giving kickbacks to doctors for many years involving diabetes and osteoporosis drugs. They gave free nursing services to those doctors. The nurses were supposed to health the patients manage their disease but instead strong encouraged the patients and doctors to use Eli Lilly products. It eventually led to kickbacks to the doctors to encourage them to buy the products.
In addition to the examples mentioned in previous posts, Olympus Corp. of Americas (OCA), the United States's largest distributor of endoscopes and related medical equipment, will pay 623.2 million to resolve criminal charges and civil claims relating to a scheme to pay kickbacks to doctors and hospitals. The criminal complaint against OCA, which OCA agrees is true, charges that OCA won new business and rewarded sales by giving doctors and hospitals kickbacks, including consulting payments, foreign travel, lavish meals, millions of dollars in grants and free endoscopes. For Example:
OCA gave a hospital a $5,000 grant to facilitate a $750,000 sale;
OCA held up a $50,000 research grant until a second hospital signed a deal to purchase Olympus equipment;
OCA paid for a trip for three doctors to travel to Japan in 2007 as a quid pro quo for their hospital’s decision to switch from a competitor to Olympus; and
a doctor with a major role in a New York medical center’s buying decisions received free use of $400,000 in equipment for his private practice.
https://www.justice.gov/usao-nj/pr/medical-device-company-will-pay-646-million-making-illegal-payments-doctors-and-hospitals
While not directly related to the kind of kickbacks we are interested in (and wary of) as medical device developers, it is interesting to take note of the trial of Senator Robert Menendez (D-NJ). He was accused of taking advantage of private trips offered by a doctor in Florida, in exchange for help in tax and Medicare fraud disputes.
A more relevant case is that of St. Louis doctor Sonjay Fonn and his fiancee Deborah Seeger. Seeger established a spinal implant company - and received a 50% commission for every implanted device. For years, Dr. Fonn used the company to supply the majority of the surgical implants he used, and benefited from the money via his fiancee's home improvements and her purchase of a yacht. While this is not a 100% clear example, it is extremely heavily suggestive of a kickback and is definitely a conflict of interest for Dr. Fonn. Dr. Fonn and Ms. Seeger were, predictably, found guilty by a federal jury.
As announced on Monday, October 17, 2016, by the United States Department of Justice (“DOJ”), the nation’s largest nursing home pharmacy, Omnicare Inc. (a CVS Health company), has agreed to pay $28.125 million to resolve allegations that it solicited and received kickbacks from pharmaceutical manufacturer Abbott Laboratories in exchange for promoting Depakote for nursing home patients.
According to the government’s complaint, Omnicare disguised the kickbacks it received from Abbott in a variety of ways. Abbott allegedly made payments to Omnicare under the guise of “grants” and “educational funding,” even though their true purpose was to induce Omnicare to recommend Depakote. The complaint provided an example revolving around its “Re*View” program in which Abbott funded with a $50,000 grant. While Omnicare claimed that Re*View was a “health management” and “educational” program, the complaint alleges that it was simply a means by which Omnicare solicited kickbacks from pharmaceutical manufacturers in exchange for increasing the utilization of their drugs on elderly nursing home residents. In internal documents, Omnicare allegedly referred to Re*View as its “one extra script per patient” program.
The complaint also alleged that Omnicare entered into agreements with Abbott by which Omnicare was entitled to increasing levels of rebates from Abbott based on the number of nursing home residents serviced, and the amount of Depakote prescribed per resident. Abbott allegedly funded Omnicare management meetings on Amelia Island in Florida, offered free tickets to sporting events to Omnicare management, and made other payments to local Omnicare pharmacies.
Of the settlement amount, approximately $20.3 million will go to the United States, with $7.8 million allocated to cover Medicaid program claims by states that elect to participate in the settlement.
Benjamin C. Mizer, Principal Deputy Assistant Attorney General and head of the DOJ Civil Division, stated,
Every day, elderly nursing home residents suffering from dementia rely on the independent judgment of our nation’s healthcare professionals for their personal care and their medical treatment. Kickbacks to entities making drug recommendations compromise their independence and undermine their role in protecting nursing home residents from the use of unnecessary drugs.
Special Agent in Charge Nicholas DiGiulio of the Department of Health and Human Services Office of Inspector General (HHS OIG), said, “it is disturbing that any health care corporation would pay kickbacks that corrupt the professional medical decision making process in order to pad their profits. These practices are unacceptable and will not be tolerated.”
This settlement, together with prior settlements with Abbott and PharMerica, resolves allegations in two federal court lawsuits pending in the Western District of Virginia, filed by Richard Spetter and Meredith McCoyd, former Abbott employees. The United States filed a complaint-in-intervention against Omnicare in December 2014 and as part of today’s resolution, McCoyd will receive $3 million from the federal share of the settlement.
