Why it matters: On Sept. 8, 2017, the DOJ announced that a pharmaceutical company agreed to pay $7.55 million to resolve allegations that it violated the False Claims Act by paying doctors kickbacks to prescribe a “highly addictive” opiate-based drug. As one DOJ official said, “This settlement constitutes another example of the Department of Justice’s ongoing efforts to battle the opioid epidemic on every front.”
Detailed discussion: On Sept. 8, 2017, the DOJ announced that Galena Biopharma Inc. agreed to pay a civil penalty in excess of $7.55 million to resolve allegations that it had violated the False Claims Act (FCA) by paying kickbacks to doctors to induce them to prescribe Galena’s fentanyl-based drug Abstral. The case was brought under the qui tam provisions of the FCA, with the whistleblower receiving a reward of over $1.2 million. The DOJ said that the “matter remains under seal as to allegations against entities other than Galena.”
Said William E. Fitzpatrick, acting U.S. attorney for the District of New Jersey, “The conduct alleged by the government and resolved by today’s settlement was egregious because it incentivized doctors to over-prescribe highly addictive opioids. This settlement constitutes another example of the Department of Justice’s ongoing efforts to battle the opioid epidemic on every front.” Added Chad A. Readler, acting assistant attorney general of the DOJ’s Civil Division, “Given the dangers associated with opioids such as Abstral, it is imperative that prescriptions be based on a patient’s medical need rather than a doctor’s financial interests.”
According to the DOJ’s allegations (which were neither admitted nor denied by Galena), Galena paid “multiple types of kickbacks” to induce doctors to prescribe Abstral, including “providing more than 85 free meals to doctors and staff from a single, high-prescribing practice; paying doctors $5,000, and speakers $6,000, plus expenses, to attend an ‘advisory board’ that was partly planned, and attended, by Galena sales team members, and paying approximately $92,000 to a physician-owned pharmacy under a performance-based rebate agreement to induce the owners to prescribe Abstral.” The DOJ noted that Galena cooperated in the May 2017 prosecution in the Southern District of Alabama of two of the doctors who received kickbacks from Galena (the doctors received prison sentences after conviction following jury trial).