The Justice Department announced that AstraZeneca has agreed to settle a qui tam lawsuit brought by two whistleblowers concerning the gastrointestinal drug Nexium. The lawsuit alleged that AstraZeneca caused the submission of false claims to government health care programs Medicaid, Medicare, and TRICARE in violation of the federal and several states’ False Claims Acts and violated the Anti-Kickback Statute.
According to its website, AstraZeneca is a worldwide biopharmaceutical company operating in more than 100 countries. It manufactures over 45 prescription medications for treatment of ailments in the areas of cardiovascular, gastrointestinal, infectious, neurological, oncology, and respiratory medicine. The allegations related to AstraZeneca’s drug Nexium. Nexium is a proton pump inhibitor used to decrease the amount of acid produced in the stomach. Typically, Nexium is used to treat gastroesophageal reflux disease (GERD).
According to the Complaint filed in the U.S. District Court for the District of Delaware, the two whistleblowers initiated their lawsuit under the qui tam provisions of the federal False Claims Act and similar statutes of California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Illinois, Indiana, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Rhode Island, Tennessee, Texas, Virginia, and Wisconsin in 2010.
The whistleblowers, Paul DiMattia and F. Folger Tuggle, are both former executives of AstraZeneca. DiMattia was an employee of AstraZeneca or its predecessors for twenty-five years. At the time of his departure from the company in 2009, he was the Executive Director of Commercial Operations. Tuggle was first employed by AstraZeneca in 1999. At the time of his termination in 2009, he was the Managed Markets Account Director– Medco. According to the Complaint, Tuggle also alleged he was terminated in retaliation for his complaints about AstraZeneca’s marketing practices.
According to ABC News, the allegations made by the whistleblowers, and later the government, involve an alleged kickback scheme whereby AstraZenca gave $100 million in price concessions on Nexium to pharmacy benefits manager Medco Health Solutions in exchange for favorable positioning of Nexium on Medco’s list of approved mediations and its promotion and purchase of Nexium. The lawsuit alleged that the discount to Medco violated the Anti-Kickback Statute and caused false claims to be submitted to government health care programs.
According to the Justice Department, AstraZeneca will pay $7.9 million to resolve the allegations. The whistleblowers will share in $1.4 million of the settlement proceeds as their reward under the qui tam provisions of the False Claims Act.