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Pharmaceutical Companies Settles Whistleblower’s Lawsuit

Pennsylvania-based Teva Pharmaceuticals USA Inc. (“Teva USA”) and its subsidiary IVAX LLC, based in Florida, have agreed to settle allegations by the government that they violated the Anti-Kickback Statute and the False Claims Act.

According to its website, Teva is the largest generic pharmaceutical company in the United States.  Teva claims that 1 out of every 6 generic prescriptions in the U.S. is filled with a Teva drug.   Teva USA and IVAX are both subsidiaries of Teva Pharmaceuticals Industries, Ltd. headquartered in Israel.

According to the Justice Department, IVAX, and later Teva USA when it acquired IVAX in 2006, paid improper kickbacks to an Illinois physician Michael J. Reinstein in order to induce him to prescribe the generic version of clozapine, a strong anti-psychotic medication.  In November 2012, the government filed a civil action against Reinstein alleging that he schemed with IVAX and Teva to prescribe the clozapine generic in return for an annual $50,000 consulting agreement and other remuneration in violation of the Anti-Kickback Statute.   The government alleged that the prescription-for-pay scheme occurred from 2003 to until at least 2009 and resulted in the submission of thousands of false claims to Medicare and the Illinois Medicaid program.

Clozapine is an anti-psychotic mediation of last-resort used to treat schizophrenia.  Due to its seriously potential side-effects (potentially deadly decrease in white blood cells, seizures, inflammation of the heart muscle, and increased mortality in elderly patients) clozapine is rarely used except in cases where patients do not respond to other treatment options.

According to the government, Reinstein was the largest prescriber of generic clozapine in the country.  In addition to the direct payments to Reinstein, IVAX allegedly provided all expenses paid trips to Florida for Reinstein, his family and employees.

Teva and IVAX have agreed to pay the State of Illinois Medicaid program $12.1 million and the United States $15.5 million to settle the government’s allegations against them.  The case against Reinstein remains pending in the United States District Court for the Northern District of Illinois.

To read more about pharmaceutical fraud cases, click here.