Phillips & Cohen whistleblower lawsuit helps government recover $41.5 million in Medicaid fraud case against Kos Pharmaceuticals

LAFAYETTE, LOUISIANA, December 7, 2010 - The federal government announced today that Kos Pharmaceuticals Inc. has agreed to pay $41.5 million to settle a criminal fine and related civil fraud charges, including those made in a whistleblower lawsuit brought by Phillips & Cohen LLP.

The "qui tam" (whistleblower) lawsuit was filed under seal in federal district court in Lafayette, Lousiana, in 2004 so it wasn't publicly known until today when the settlement was announced and the case was unsealed. Kos Pharmaceuticals, acquired by Abbott Laboratories Inc. in 2006, paid approximately $14 million out of the total settlement to settle Phillips & Cohen's qui tam case. The remainder of the settlement covers a separate whistleblower lawsuit, a criminal fine and interest.

The settlement resolved allegations that Kos violated federal and state false claims acts by engaging in marketing Advicor, a prescription drug, for off-label uses. It also includes state False Claims Act claims for paying kickbacks to boost sales of Advicor and Niaspan, another prescription drug. Both Advicor and Niaspan are used to treat high cholesterol.

Doctors are allowed to prescribe drugs for uses that haven't been approved by the Food & Drug Administration - known as "off-label' uses. But pharmaceutical companies aren't allowed to market drugs for off-label uses or offer financial inducements to doctors to prescribe them.

A number of states will split $4.45 million from the settlement for Medicaid funds lost to the fraud. Three states -- Louisiana, Wisconsin and Missouri -- and the District of Columbia announced in September that they will share in the settlement.