Consumer Fraud

Forest Labs Will Pay $38 Million To Resolve Allegations It provided illegal kickbacks

Pills Stethascope on Money 435x289 Forest Labs Will Pay $38 Million To Resolve Allegations It provided illegal kickbacksNew York City-based Forest Laboratories and its subsidiary Forest Pharmaceuticals have agreed to pay the U.S. government $38 million to resolve a False Claims Act lawsuit brought by a whistleblower who claimed the companies engaged in illegal kickback schemes to coax doctors into prescribing their drugs.

The lawsuit, filed by former Forest employee Kurt Kroening in federal court in Milwaukee, Wis., accused Forest of pushing its drugs Bystoic, Savella, and Namenda between Jan. 1, 2008, and Dec. 31, 2011, by providing kickbacks to physicians in the form of payments and meals.

Federal prosecutors investigated Mr. Kroening’s claims and chose to intervene, effectively taking over the litigation of his case. According to the U.S. government, the payments and meals Forest provided to physicians were illegal inducements because they were given even when the programs were canceled, and Forest could provide no evidence of a legitimate reason for the cancellation.

Additionally, Forest provided the benefits when no licensed health care professionals attended the programs, when the same attendees had attended multiple programs over a short period of time, or when the meals associated with the programs exceeded Forest’s internal cost limitations, the government alleged.

“Kickback schemes undermine the integrity of medical decisions and increase the costs of health care for everyone,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Such schemes are particularly of concern when they are designed to influence drug prescriptions, and the Department of Justice will vigorously pursue companies that subvert the law at the public’s expense.”

The U.S. Department of Justice said that the federal government will receive $35.5 million of the settlement and state Medicaid programs will receive the remaining $2.5 million. The Medicaid program is funded jointly by the federal and state governments.

Whistleblowers who file a False Claims Act lawsuit that results in a recovery of government funds are awarded between 15 and 30 percent of the total recovery. The court awarded Mr. Kroening $7.8 million, about 20.5 percent of the total recovery, for his role in helping the government recoup health care funds.

Source: U.S. Department of Justice