Victory Pharma to Pay 11.4 Million in Kickback Probe

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By: Cynthia Diaz-Shepard
Specialty pharmaceutical firm, Victory Pharma Inc., just agreed to pay $11.4 million to resolve federal civil and criminal liability charges over how it marketed some pharmaceutical products, the Justice Department announced. The way in which Victory Pharma marketed Naprelan, Xodol, Fexmid and Dolgic is at issue, said The Washington Times.

Under the agreement, the San Diego-based pharmaceutical company entered into a deferred prosecution agreement, paying $1.4 million in criminal forfeiture to resolve federal Anti-Kickback Statute accusations. Victory Pharma also paid $9,938,310 to resolve False Claims Act allegations, said The Washington Post.

Accusations include that Victory Pharma was involved in a scheme to advance sales of its drugs by paying physician kickbacks so that doctors would write prescriptions for Victory’s products. This included, said The Washington Post, prescriptions for Medicare patients and patients covered by other federal health insurance programs. Kickbacks included tickets to professional and collegiate sporting events and to concerts and plays; spa, golf, and ski outings; dinners at expensive restaurants; and many other out-of-office events, The Washington Post said.

An attorney representing whistleblower Chad Miller, also said that some other kickbacks included paying a doctor to help make a house payment; paying for a doctor’s staff’s outing to a strip club, which included “lap dances” for the female staff; and offering a doctor and his staff an all-expense paid trip to Las Vegas, said The Washington Post.

The settlement resolved a False Claims Act lawsuit filed in California by Miller, who was a former Victory sales representative. The False Claims Act allows whistleblowers to obtain a portion of the proceeds obtained by the federal government. In this case, Miller will receive $1.7 million, The Washington Post noted.

Principal Deputy Assistant Attorney General Stuart F. Delery, in the Justice Department’s Civil Division, told The Washington Post that kickback schemes “undermine the integrity of medical decisions, subvert the health marketplace and waste taxpayer dollars,” adding that, “We will continue to hold accountable those who refuse to play by the rules and provide illegal incentives to influence the decision making of health care providers.”

The settlement is the result of a collaboration among the Justice Department’s Civil Division; the U.S. Attorney’s Office for the Southern District of California; the Federal Bureau of Investigation (FBI); the Offices of Inspectors General for Health and Human Services, Justice and Labor; the U.S. Postal Service; the Veterans Administration; and the Office of Personnel Management, said The Washington Post.

A whistleblower is an employee, former employee, or organization member—especially a business or government agency—who reports misconduct to people or entities with the power and presumed willingness to take corrective action. Generally, the misconduct is a violation of law, rule, regulation, and/or presents a direct threat to public interest, such as fraud, health/safety violations, and corruption. Whistleblower complaints focus on conduct prohibited by a specific law and that may cause damage to public safety, that may waste tax dollars, or that may violate public trust in an honest, accountable government. The hope is that massive financial debacles, such as what was seen in the historic Bernard Madoff Ponzi scam, are averted.