The Department of Justice (DOJ) flew in the face of its critics last Thursday when it indicted W. Carl Reichel, former president of Warner Chilcott PLC’s pharmaceutical division, on charges of conspiring to pay kickbacks to physicians. The felony health care fraud charge was part of a False Claims Act (FCA) settlement agreement that also included $125 million in fines.
The arrest may silence critics who last week accused the DOJ of breaking its vow to get tough against Big Pharma leaders when it let Novartis off the hook for an alleged illegal kickback scheme with a $390 million settlement, but no penalties for company brass. The DOJ had also promised to hold individuals responsible, pledging to look more closely for criminal wrongdoing in FCA cases.
The Novartis settlement gave some whistleblower watchdog groups reason to doubt the DOJ’s commitment to pursue criminal charges in these cases. Patrick Burns, co-director of Taxpayers Against Fraud, told Law360, “DOJ will lose credibility if it does not hold individuals accountable in a case of this size, where the company is a recidivist already operating under a corporate integrity agreement.”
Following Reichel’s arrest, the DOJ fired back in a statement saying, “Today’s enforcement actions demonstrate that the government will seek not only to hold companies accountable but will identify and charge corporate officials responsible for the fraud.”
Reichel has been charged with criminal kickbacks conspiracy and health care fraud. If convicted, he could face five years in prison and a $250,000 fine. He has pleaded not guilty to the charges.
The whistleblower lawsuit involves an alleged illegal marketing scheme for osteoporosis prescription drugs, and violations of the Health Insurance Portability and Accountability Act (HIPAA). The DOJ asserts Reichel developed the scheme to defraud Medicare Part D by submitting false claims that did not accurately reflect patient conditions. The lawsuit also alleges the company’s marketing representatives were instructed to present the Warner Chilcott osteoporosis drug Actonel as superior to competitors, a claim unsupported by the U.S. Food and Drug Administration (FDA).
Burns called Reichel’s indictment a “red-letter day for integrity.”
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