Drug Maker Mallinckrodt Agrees to Pay $15.4 Million to Resolve False Claims Act Allegations for "Wining and Dining" Doctors

PHILADELPHIA – United States Attorney William M. McSwain announced today that pharmaceutical company Mallinckrodt ARD LLC (formerly known as Mallinckrodt ARD, Inc. and previously Questcor Pharmaceuticals, Inc. (“Questcor”)), has agreed to pay $15.4 million to resolve claims that Questcor paid illegal kickbacks to doctors from 2009 through 2013 in the form of lavish dinners and entertainment, to induce prescriptions of the company’s drug, H.P. Acthar Gel (“Acthar”) for the treatment of complications from multiple sclerosis.

The Federal Anti-Kickback Statute prohibits a pharmaceutical company from offering or paying, directly or indirectly, any remuneration—which includes money or any other thing of value—with the intent to induce a health care provider to prescribe a drug reimbursed by Medicare. This prohibition extends to such practices as “wining and dining” doctors to induce them to write Medicare prescriptions of a company’s products.

The government alleges that, from 2009 to 2013, twelve Questcor sales representatives marketing Acthar provided illegal remuneration to health care providers in the form of lavish meals and entertainment expenses. The company paid this remuneration, the government alleges, with the intent to induce Acthar Medicare referrals from those health care providers, resulting in a violation of the Anti-Kickback Statute and the submission of false claims to Medicare.

“Federal law protects patients from medical providers who write prescriptions so they can enrich themselves and from drug companies who do not play by the rules in their marketing and promotional efforts,” said U.S. Attorney McSwain. “Kickback schemes are a form of illegal pay-to-play business practices that have no place in our health care system; they interfere with physician-patient relationships and drive up the cost of health care.”

“The Department of Justice will hold companies accountable for the payment of illegal kickbacks in any form,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “Improper inducements have no place in our federal healthcare system, which depends on physicians making decisions based on the healthcare needs of their patients and not on or influenced by personal financial considerations.”

“Paying kickbacks to win business, as contended in this case, cheats taxpayers and the patients who rely on government health care programs for essential care,” said Maureen R. Dixon, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “We will continue working with our law enforcement partners to hold accountable entities paying such kickbacks.”

The allegations relevant to this settlement were originally alleged in two cases filed under the whistleblower, or qui tam, provision of the False Claims Act. The act permits private parties to sue for fraud on behalf of the United States and to share in any recovery. The act also permits the government to intervene in such actions, as the government previously did in the two whistleblower cases, which are captioned United States of America ex rel. Strunck et al. v. Mallinckrodt ARD, Inc., No. 12-CV-0175 (E.D. Pa.), and United States of America ex rel. Clark v. Questor Pharmaceuticals, Inc., No. 13-CV-1776 (E.D. Pa.). The government’s pursuit of these matters illustrates its emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800 HHS TIPS (800-447-8477). The whistleblowers will receive approximately $2.926 million of the settlement.

This matter is being handled by the Civil Division of the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Department of Justice’s Commercial Litigation Branch, with assistance from the U.S. Department of Health and Human Services’ Office of Inspector General, the Defense Criminal Investigative Service, the Federal Bureau of Investigation and the Office of Personnel Management. For the United States Attorney’s Office, the matter is being handled by Assistant United States Attorney Colin Cherico and Auditor George Niedzwicki.

The claims resolved by settlement are allegations only and there has been no determination of liability.