Kos Pharmaceuticals Settles Kickback Case for $41 Million

Kos Pharmaceuticals, a subsidiary of Abbott Laboratories, has agreed to pay more than $41 million to resolve criminal and civil liability arising from conduct relating to its drugs Advicor and Niaspan, the Justice Department announced today.

 According to the agreement reached with the government, the Delaware-based company will pay more than $38 million to settle civil allegations under the False Claims Act.

Specifically, the civil settlement resolves allegations that Kos offered and paid doctors, other medical professionals, physician groups and managed care organizations, illegal kickbacks in the form of money, free travel, grants, honoraria and other valuable goods and services, in violation of the Anti-Kickback Statute to get them to prescribe or recommend Niaspan and Advicor.

In addition, the United States contends that Kos promoted the sale and use of Advicor for use as first-line therapy for management of mixed dyslipidemias (a disruption of the lipids in the blood). Such an off-label use was not approved by the Food and Drug Administration nor was it a medically-accepted indication for which the United States and state Medicaid programs provided coverage for Advicor. The federal share of the civil settlement is $33,705,310 and the state Medicaid share is $4,454,432.

As part of today's resolution, Kos also has entered into a deferred prosecution agreement and agreed to the filing of a criminal information in U.S. District Court for the Middle District of Louisiana charging the company with one count of conspiracy to violate the Anti-Kickback Statute. According to the criminal information, Kos conspired to violate the statute by agreeing to pay physicians kickbacks in exchange for their writing prescriptions for Kos drugs. 

Specifically, two doctors proposed that they would endorse the use of Kos products, including Advicor, for the treatment of cholesterol in exchange for a series of payments. Between January 2002 and June 2006, one of the doctors wrote 4,130 prescriptions for Kos products.

According to the court documents, some of those prescriptions were paid for by Medicare and Medicaid. From 2002 to 2004, Kos made a series of payments to the two doctors or a third party intermediary in the form of "sponsorship of continuing medical education classes conducted by the doctors and purported speakers' fees. Kos has agreed to pay a $3.36 million criminal fine as a condition of the deferred prosecution agreement.

 The department agreed to enter into a deferred prosecution agreement with Kos based in part on the company's undertaking of a thorough internal investigation of misconduct; its reporting of information from the investigation to the department on a regular basis; its continued and ongoing cooperation with the department's investigation of the matter; and in recognition of the remedial measures undertaken by the company.

 "Pharmaceutical companies that pay kickbacks to medical professionals take from the taxpayers and undermine the integrity of choices that doctors make for their patients, said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "We will work with our federal partners to ensure that important health care decisions are based on sound medicine, not illegal payments.

 The civil settlement resolves two lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens with knowledge of fraud to bring civil actions on behalf of the United States and share in any recovery. As a part of today's resolution, the whistleblowers, all former employees of Kos, will receive payments totaling more than $6.4 million from the federal share of the civil recovery.

"Today's resolution of claims against Kos underscores one of the key purposes of the Anti-Kickback law-that is, to ensure that the judgment exercised by health care providers in treating Medicare and Medicaid patients is not influenced by illegal payments, said James L. Santelle, U.S. Attorney for Eastern District of Wisconsin. 

 "Paying kickbacks to doctors and marketing drugs for off-label purposes will simply not be tolerated," said Daniel R. Levinson, Inspector General of the Department of Health and Human Services. "Kos, which currently does not sell any products that are reimbursed by federal health care programs, has agreed that, should it seek to sell such products anytime in the next five years, the company will enter into a formal compliance program with OIG.