Whistleblower Paid $7.8 Million for Reporting Pharmaceutical Kickback Scheme

Mary Jane Wilmoth

Published On: December 27th, 2016

On December 15, 2016, the Department of Justice announced that Forest Laboratories LLC (Forest), located in New York, New York, and its subsidiary, Forest Pharmaceuticals Inc., have agreed to pay $38 million to resolve allegations that they violated the False Claims Act by paying kickbacks to induce physicians to prescribe the drugs Bystolic®, Savella®, and Namenda®.

The settlement resolves allegations that Forest violated the Anti-Kickback Statute, which prohibits the payment of remuneration to induce referrals of items or services covered by federal health care programs, by providing payments and meals to certain physicians in connection with speaker programs about Bystolic®, Savella®, or Namenda® between Jan. 1, 2008 and Dec. 31, 2011.

“Kickback schemes undermine the integrity of medical decisions and increase the costs of health care for everyone,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Such schemes are particularly of concern when they are designed to influence drug prescriptions, and the Department of Justice will vigorously pursue companies that subvert the law at the public’s expense.”

Under the $38 million settlement, the federal government will receive $35.5 million and state Medicaid programs will receive $2.5 million. The Medicaid program is funded jointly by the state and federal governments.

This case stems from a lawsuit by former Forest employee Kurt Kroening which was filed under the qui tam, or whistleblower, provisions of the False Claims Act. The qui tam provisions permit private individuals to sue on behalf of the government for false claims and to share in any recovery. Mr. Kroening will receive approximately $7.8 million.