Basics of the Settlement
The case was that of ISTA Pharmaceuticals. The basics appeared in brief wire service articles, like this one from Rueters (via Fox News):
Ista Pharmaceuticals pleaded guilty on Friday to charges it used kickbacks and improper marketing to boost sales of a drug meant to treat eye pain and agreed to pay $33.5 million to settle criminal and civil liability, the U.S. Department of Justice said.
The unit of eye care company Bausch & Lomb pleaded guilty to conspiracy to offer kickbacks to induce physicians to prescribe Xibrom, a drug meant to treat pain after cataract surgery, and conspiracy to promote that drug for unapproved uses, including after Lasik and glaucoma surgeries.
Ista agreed as part of a criminal settlement to a $16.63 million fine and an $1.85 million asset forfeiture. It also agreed to a $15 million civil settlement to resolve allegations that its marketing of Xibrom caused false claims to be submitted to government health care programs.
Kickbacks Disguised as Honoraria and Consulting Fees
Note that unlike many such legal settlements involving large health care organizations, this one involved admissions of guilt to felonious criminal offenses. The severity of the charges apparently arose out of the egregious conduct of company executives. Colorful details were supplied by the Buffalo (NY) News:
ISTA, which is based in California, admitted using kickbacks to doctors and an illegal marketing campaign as part of an elaborate scheme to increase its sales of Xibrom.
The scheme, outlined in detail in newly released court papers, ranged from company-provided instruction sheets for doctors to continuing medical education programs to promote the drug.
In many cases, ISTA employees were told not to leave printed materials behind in doctors’ offices or to keep records of their meetings with doctors in order to avoid detection by others.
The company went so far as to offer speaking engagements and consulting appearances to doctors in hopes that they might use Xibrom for non-authorized treatments.
Doctors can legally prescribe drugs for non-FDA approved treatments, but drugmakers are prohibited from promoting their products for those uses.
'Essentially they entered into consulting arrangements to induce physicians to prescribe their drug,' said Jeffrey I. Steger, a lawyer in the Consumer Protection Branch of the U.S. Department of Justice.
When [US District Judge Richard J] Arcara asked if money was the doctors’ motivation, Steger said yes.
'Thousands of dollars,' he told the judge.
So here we have a company admitting that it bribed doctors to prescribe its drug, and its techniques of administering bribes included paying the doctors honoraria to give talks, and paying the doctors as consultants. As an aside, note that many defenders of "collaboration" among doctors and industry sign the praises of doctors "consulting" for industry, and often see nothing wrong with industry paying doctors for "educational" speeches. Yet here is more evidence that such paid talks and consulting assignments may be nothing more than marketing, and at times are merely disguised bribery.
That would appear to be the death knell for the company, as reported by Reuters,
Bausch & Lomb, which is based in Rochester, New York, said it was pleased to settle the matter, which involved conduct between January 2006 and March 2011, and that it knew of the government probe well before it purchased Ista.So Bausch and Lomb bought a company that turned out to be valueless? But wait,... there's a trick.
That purchase closed in June 2012 and Bausch and Lomb plans to wind down the Ista corporate entity by year end.
As detailed in FiercePharma,
ISTA will be barred from doing business with Medicare, Medicaid, et al, for 15 years. Luckily for Bausch + Lomb, however, it bought ISTA in June 2012, late enough in the game to actually escape the ramifications of exclusion. The exclusion won't begin until 6 months after the settlement date, giving Bausch + Lomb time to transfer ISTA's products out of that subsidiary and shift the drugs over to the Bausch + Lomb label.