Saturday, December 29, 2012

Pyrrhic Victory - a tale of kickbacks

On Dec. 27, San Diego pharmaceutical company Victory Pharma Inc. agreed to pay $11.4 million to settle Anti-Kickback Statute and False Claims Act allegations. The deferred prosecution agreement resolves allegations that Victory promoted its drugs by paying kickbacks to doctors that encouraged them to write prescriptions for Victory’s products.

The Kickbacks

According to the press release, 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. The company also had it’s sales representatives shadow doctors in their offices to ensure that the doctors prescribed Victory products.

Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division, commented on the need to monitor for kickbacks. “Kickback schemes undermine the integrity of medical decisions, subvert the health marketplace and waste taxpayer dollars. We will continue to hold accountable those who refuse to play by the rules and provide illegal incentives to influence the decision making of health care providers.”

Agencies involved

The issued statement indicates that the settlement is the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Southern District of California; the FBI; and the Offices of Inspectors General for Health and Human Services, the Department of Defense, the Department of Labor, the U.S. Postal Service, the Veteran’s Administration, and the Office of Personnel Management.

The federal government has increased its efforts to fight health care fraud by using the Health Care Fraud Prevention and Enforcement Action Team (HEAT), which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The goal of the inter-departmental partnership is to eliminate Medicare fraud. The Justice Department has used the False Claims Act to recover $10.1 billion for cases involving federal health care programs since January 2009.

Company background

According to Business Week, “Victory Pharma, Inc. engages in acquiring, developing, and marketing prescription pharmaceutical products for the treatment of pain and related conditions. The company also develops pharmaceuticals that treat pain and minimize side effects associated with widely-used pain therapeutics.” In July 2011, the company announced that it sold all of it’s marketed products to Shionogi Inc., the U.S.-based unit of Japan’s Shionogi & Co. The company’s website ( is no longer operational and has an “under construction” page.

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