Victory Pharma settles whistleblower's kickback allegations for $11.4 million

by Ben Vernia | December 30th, 2012

On December 27, the Department of Justice announced that Victory Pharma, Inc., had agreed to pay $11.4 million to settle a qui tam relator’s allegations that the company paid kickbacks to physicians in order to boost prescriptions of the company’s drugs. According to DOJ’s press release:

Victory Pharma Inc., a specialty pharmaceutical company headquartered in San Diego, has agreed to pay $11,420,743 to resolve federal civil and criminal liability arising from its marketing of the pharmaceutical products Naprelan, Xodol, Fexmid and Dolgic, the Justice Department announced today. Under the agreement announced today, Victory entered into a deferred prosecution agreement and paid a criminal forfeiture of $1.4 million to resolve federal Ant-Kickback Statute allegations, and paid $9,938,310 to resolve False Claims Act allegations.

The settlement resolves allegations that Victory engaged in a scheme to promote its drugs by paying kickbacks to doctors to induce them to write prescriptions for Victory’s products, including prescriptions for patients covered by Medicare and other federal health insurance programs. The kickbacks included tickets to professional and collegiate sporting events; tickets to concerts and plays; spa outings; golf and ski outings; dinners at expensive restaurants; and numerous other out-of-office events. Victory also encouraged its sales representatives to schedule paid “preceptorships,” which involved sales representatives “shadowing” doctors in their offices. The settlement also resolves allegations that Victory improperly used these preceptorships to induce doctors to prescribe Victory’s products.

The Government announced that the whistleblower, a former Victory sales representative, will receive $1.7 million (a relator’s share of 17% of the False Claims Act portion of the recovery).

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