A major pharmaceutical company agreed to settle a qui tam action for improperly influencing doctors to prescribe medications that caused the submission of false claims to Medicare and Medicaid. (Qui tam actions allow a private party to sue on behalf of the government and collect part of any recovery.)

The lawsuit, which was filed in the United States District Court for the District of Massachusetts, alleged that the company-defendant improperly paid physicians to influence their prescription decisions regarding medication to treat multiple sclerosis, ultimately driving up costs to the government through various government-sponsored health programs. According to the whistleblower Complaint, the company paid unlawful kickbacks and other improper compensation in the form of speaker honoraria, speaker training fees, consulting fees and meals for physicians who spoke at company-sponsored events to persuade them to prescribe certain medications.

Under the settlement agreement, the company agreed to pay $843,805,187 to the United States and $56,194,813 to 15 individual states. The agreement is one of the largest False Claims Act settlements by a publicly traded company. Consistent with the False Claims Act's relator's share provisions, the whistleblower stands to receive more than $25 million (independent of any attorney fees and cost awards that may also be granted).

Commentary

Policing unlawful activity in the pharmaceutical industry remains a key focus of qui tam relators and the government alike in pursuing False Claims Act matters (see here). And settlements of this size serve as a sobering reminder to company boards and shareholders of power behind those enforcement actions.