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Pharmaceutical Manufacturer Agrees to Pay U.S. Government $7.9 Million for Alleged Kickback Scheme

On February 11, 2015, the Department of Justice (DOJ) announced that AstraZeneca, a pharmaceutical manufacturer headquartered in Delaware, agreed to pay the U.S. government $7.9 million to resolved allegations that it violated the False Claims Act (FCA) by allegedly offering kickback incentives to Medco Health Solutions (Medco), a drug management company, in exchange for selling its pharmaceutical products.

According to the lawsuit filed in 2010 by two former AstraZeneca employees under the qui tam provisions of the FCA, AstraZenca agreed to pay kickbacks to Medco in the form of price breaks on certain heartburn and high blood pressure drugs, namely Prilosec, Toprol XL, and Plendil, among other drugs.  In exchange, Medco allegedly agreed to list Nexium, a drug used to treat acid reflux and ulcers, as “sole and exclusive” on its list of eligible medications covered by government health care plans.  However, because of the alleged agreement between AstraZenca and Medco claims submitted to Medicare and other government healthcare plans for Nexium were in violation of the Anti-Kickback statue and the FCA.

A provision of the FCA makes it unlawful for a person or company to submit false claims under a Federal health care program with the intention of knowingly and willfully committing fraud. In addition, the whistleblowers provision of the FCA was designed to prevent fraud on the government, and is one of the most effective methods that the government has implemented for combating fraud.  Under the FCA, any person, who knows of an individual or company that has defrauded the federal government, can file a “qui tam” lawsuit to recover damages on the government’s behalf.  Additionally, a whistleblower who files a case against a company that has committed fraud against the government, may receive an award of up to 30 percent of the settlement. In this case, former AstraZeneca employees Paul DiMattia and F. Folger Tuggle will share approximately $1.4 million for exposing AstraZeneca and Medco’s alleged kickback scheme.

© 2019 by Tycko & Zavareei LLP

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About this Author

Jonathan K. Tycko, Civil Litigation Attorney, Tycko Zavareei Law firm
Partner

Mr. Tycko has represented clients in numerous qui tam whistleblowing cases, in areas including Medicare fraud, government contracts fraud, and tax fraud. In addition, with the 2010 passage of the Dodd-Frank Act, Mr. Tycko’s practice has expanded into representation of whistleblowers in the areas of securities and commodities, and violations of the Foreign Corrupt Practices Act.

Mr. Tycko focuses his practice on civil litigation, with special concentrations in whistleblower cases, consumer class actions, unfair competition litigation, employment litigation and housing litigation. He...

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