Drug companies defrauded Medicare of millions

BMJ 2001; 323 doi: (Published 13 October 2001) Cite this as: BMJ 2001;323:828
  1. Fred Charatan
  1. Florida

    A joint venture of Takeda Chemical Industries and Abbott Laboratories—TAP Pharmaceutical Products—has agreed to pay $875m (£583) to settle criminal and civil charges that it had illegally manipulated the Medicare and Medicaid programmes.

    The settlement tops the $840m paid by the healthcare company HCA for fraud (BMJ 2001;322:10). Federal prosecutors said that sales representatives from TAP gave doctors free samples of leuprorelin acetate (marketed as Lupron in the United States and Prostap in the United Kingdom), which is used to treat prostate cancer and infertility. The representatives then helped them to get government reimbursements at hundreds of dollars for each dose injected.

    Employees of TAP were charged with giving kickbacks—trips to resorts, medical equipment, and “educational grant” payments to doctors if they prescribed leuprorelin.

    The investigation began four years ago when Douglas Durand, a former vice president for sales at TAP, and Dr Joseph Gerstein, a urologist employed by Tufts Associated Health Maintenance Organisation in Waltham, Massachusetts, separately told federal officials about what they believed were illegal sales practices by TAP. Dr Gerstein said that TAP sales representatives offered him an unrestricted $65000 in grants if he would reverse his decision to have his health maintenance organisation use only goserelin acetate (Zoladex), a less expensive drug that competes with leuprorelin.

    Medicare now covers a very limited number of drugs. Most of them, like leuprorelin, must be administered by a doctor. Drug companies supply doctors with drugs to give to Medicare patients, and Medicare then repays the doctors based on a price provided by the companies called the “average wholesale price.”

    Thomas Watkins, the president of TAP, admitted that it provided free samples of leuprorelin to some doctors in the first half of the 1990s, knowing that the doctors would seek reimbursement from the federal government.

    “The billing for free samples is wrong, and it should never have happened,” Mr Watkins said. “We have taken strong action so that this inappropriate marketing practice will never happen again.”

    Michael Sullivan, the US attorney for Massachusetts said that the settlement and indictments sent “a very strong signal to the pharmaceutical industry.” He said, “These types of behaviour are not tolerated and are going to be investigated, even if it takes four and a half years to bring to conclusion.”

    The government has also charged five doctors with healthcare fraud in the case. Federal prosecutors said that those doctors had conspired with the company to receive excessive Medicare reimbursements. Four pleaded guilty, and the fifth was recently indicted.

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