by Ben Vernia | March 12th, 2014
On March 11, the Department of Justice announced that Teva Pharmaceuticals, Inc., and its subsidiary, Ivax, paid kickbacks to an Illinois doctor to induce him to prescribe their generic antipsychotic, Clozapine. According to DOJ’s press release:
Pharmaceutical manufacturer Teva Pharmaceuticals USA Inc. and a subsidiary, IVAX LLC, have agreed to pay the government and the state of Illinois $27.6 million for allegedly violating the False Claims Act by making payments to induce prescriptions of an anti-psychotic drug for Medicare and Medicaid beneficiaries . Teva Pharmaceuticals USA is located in North Wales, Pa., and IVAX LLC is a Florida company.
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The settlement resolves allegations that Teva and IVAX made payments to an Illinois physician, Dr. Michael J. Reinstein, to induce the prescription of generic clozapine, an anti-psychotic medication. Clozapine has serious potential side effects and is generally considered a drug of last resort, particularly for elderly patients. While clozapine has been approved for treatment-resistant forms of schizophrenia, it is also reported to cause numerous side effects, including a potentially deadly decrease in white blood cells, seizures, inflammation of the heart muscle and increased mortality in elderly patients. The United States alleged that the payment scheme involving Reinstein began in August 2003, when Reinstein agreed to switch his patients to generic clozapine if IVAX, which was subsequently acquired by Teva Pharmaceuticals’ parent corporation, agreed to pay Reinstein $50,000 under a one-year “consulting agreement” and to provide other benefits to Reinstein , in violation of the federal Medicare and Medicaid Anti-Kickback Statute . In addition to direct payments to Reinstein, IVAX allegedly also provided all-expenses paid trips to Miami for Reinstein, his wife and several of his employees. Reinstein quickly became the largest prescriber of generic clozapine in the country, and prescribed the drug for many elderly patients. Allegedly, the payments and other forms of remuneration from IVAX and later Teva Pharmaceuticals continued for many years, and resulted in the submission of thousands of false claims to the Medicare Part D and Illinois Medicaid programs.
The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs. The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.
On Nov. 15, 2012, the United States filed a civil action against Reinstein in United States v. Reinstein , alleging that he violated the False Claims Act as a result of his involvement in the payment scheme with Teva and IVAX. The civil action against Reinstein remains pending in the Northern District of Illinois.