Former drug firm president is charged with masterminding kickback scheme for physicians

Less than a month after a US Justice Department memo urged prosecutors to target individual executives in corporate wrongdoing cases,1 the former president of the drug company Warner Chilcott has been arrested and charged, accused of masterminding a kickback scheme that funded lavish entertainments for physicians who agreed to prescribe the company’s products.

Carl Reichel, 57, of New Jersey, pleaded not guilty in a Massachusetts district court to a charge under the federal Anti-Kickback Statute, which prohibits the offer or acceptance of inducements to refer treatment paid by federal health programs. Also charged were a regional sales director and two district managers, who pleaded guilty, and one physician accused of accepting kickbacks, the Massachusetts gynecologist Rita Luthra, 64, who entered a not guilty plea.

At the same time the company itself pleaded guilty to felony healthcare fraud and paid $22.9m (£15m; €21m) in criminal fines and $102m to settle a civil suit making similar allegations that was brought by two former sales employees but later joined by the federal government.

The case will send shockwaves through the industry, …