Whistleblower kickback case against Alpharma results in $42.5 million recovery

WASHINGTON, March 17, 2010 -- Alpharma Inc. has agreed to pay $42.5 million to the federal government and certain states to settle a whistleblower lawsuit that exposed an alleged kickback scheme by the pharmaceutical company to boost its sales of Kadian, a prescription painkiller.

"Patients need to know their doctors are prescribing drugs solely because it will benefit them - not the doctor's bank account," said Mary Louise Cohen, a Washington, DC, attorney with Phillips & Cohen LLP, which represents the whistleblower.

The settlement was announced Tuesday by the U.S. Department of Justice, which had joined the "qui tam" (whistleblower) case. The government investigation was led by Assistant U.S. Attorneys Jamie Bennett and Thomas Corcoran in Baltimore and Senior Trial Counsel Daniel Spiro in the Justice Department's Washington headquarters.

The qui tam lawsuit alleged that Alpharma was paying kickbacks to doctors to encourage them to prescribe Kadian, a morphine-based drug, for both federally approved uses and "off-label" uses that the U.S. Federal Drug Administration hadn't approved.

These inducements included payments for sham "consulting" arrangements, payments for attendance at meetings held at fancy resorts with lavish entertainment and also "educational grants," which were just thinly disguised kickbacks.

Federal anti-kickback laws prohibit drug manufacturers from offering inducements to physicians for the purpose of influencing the physicians' prescribing practices. The anti-kickback laws are designed to ensure that doctors prescribe medications based upon informed, impartial medical judgment unaffected by personal financial motivations.

Alpharma is now a wholly owned subsidiary of King Pharmaceuticals Inc., based in Bristol, Tennessee. The settlement will be split between the federal government ($33.6 million) and certain states that participated in the lawsuit ($8.9 million).