Opioid giant Purdue Pharma pleaded guilty last week to fraud and kickback violations, cementing the power of the US False Claims Act and anti-kickback laws in fighting pharmaceutical companies’ corrupt and dangerous practices.
Purdue will pay a criminal fine of $3.54 billion and $2 billion in criminal forfeiture. These are the largest criminal penalties imposed on a pharmaceutical manufacturer to date. Purdue also agreed to pay a $2.8 billion civil settlement.
The eye-popping numbers are a vindication of US enforcement and – regarding the civil settlement – of the US False Claims Act, but are cold comfort for those touched by the tragedy of the US opioid crisis.
Purdue pleaded guilty to three felony offenses: one count of dual-object conspiracy to defraud the United States and to violate the Food, Drug and Cosmetic Act, and two counts of conspiracy to violate the Federal Anti-Kickback Statute.
Purdue admitted that between 2007 and through at least 2017, it conspired to defraud the United States by misleading the Drug Enforcement Administration (DEA) about its anti-diversion program and its manufacturing quotas, thus allowing a network of doctors to engage in widespread diversion of opioid products. As part of its scheme, Purdue violated the Food, Drug, and Cosmetic Act by encouraging and enabling the dispensing of its opioid products, including OxyContin, without a legitimate medical purpose.
Purdue also admitted using a sham speaker program to induce physicians to prescribe more of the company’s opioid products and conspired with an electronic health records vendor to recommend Purdue opioids to boost prescriptions. Both of these practices violated the Anti-Kickback Statute.
“Purdue put opioid profits ahead of people and corrupted the sacred doctor-patient relationship,” said US Attorney Christina Nolan in a press release. “We hope the company’s guilty plea sends a message that the Justice Department will not allow big pharma and big tech to engage in illegal profit-generating schemes that interfere with sound medicine.”
The $2.8 billion False Claims Act resolution is a landmark success for the federal anti-fraud law and demonstrates its power for pursuing a wide range of malfeasance.
The False Claims Act creates liability for frauds against the federal government that result in financial loss and permits the government to recover three times the amount that would otherwise have been lost to the wrongful practices.
Importantly, the law also empowers whistleblowers with information about frauds against the government to file so-called “qui tam” lawsuits on the government’s behalf and entitles those individuals to a share of the government sanctions collected, if they exceed $1 million. The case against Purdue did not involve whistleblowers.
Whistleblowers and the opioid crisis
Whistleblowers have played an important role in exposing fraudulent practices that have contributed to the opioid epidemic. Employees of opioid manufacturers, for example, have blown the whistle on fraudulent physician speaker programs that pushed inappropriate opioid prescribing and illegal off-label prescription schemes that resulted in unnecessary and harmful dispensing of powerful, addictive opioids.
Insys Therapeutics, the former manufacturer of the powerful fentanyl spray Subsys, used sham speaker programs and cash bribes as part of its illegal efforts to encourage physicians to over-prescribe the drug. The scheme was in part revealed by a former Insys sales rep, who exposed Insys’s tactics in a qui tam lawsuit. The whistleblower is represented by Phillips & Cohen and the Law Office of Mark Kleiman.
Another Phillips & Cohen client was one of the first whistleblowers to alert the government to pharma companies’ aggressive tactics to increase opioid prescriptions. Bruce Boise, a former Cephalon sales rep, alleged that the company was illegally marketing Actiq, a powerful fentanyl lollipop, for general pain.
Industry insiders often have information about wrongful practices by opioid manufacturers and prescribers that may be the subject of a whistleblower lawsuit. If you know of opioid-related pharmaceutical fraud, consult with an experienced whistleblower attorney. For a free, confidential review of your matter, contact Phillips & Cohen.
ABOUT PHILLIPS & COHEN LLP
Phillips & Cohen is the most successful law firm representing whistleblowers, with recoveries from our cases totaling over $12.3 billion. We have been recognized for our work by numerous national awards. The New York Times, The Wall Street Journal, the Financial Times and other news media have featured many stories about our cases and our attorneys. Phillips & Cohen’s roster includes former federal prosecutors, the first head of the SEC Office of the Whistleblower, a former deputy administrator of the Centers for Medicare and Medicaid Services, the author of a leading treatise on the False Claims Act and attorneys with decades of experience representing whistleblowers.