AstraZeneca Pleads Guilty in Cancer Medicine Scheme

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http://www.nytimes.com/2003/06/21/business/21CANC.html?th

 

June 21, 2003AstraZeneca Pleads Guilty in Cancer Medicine SchemeBy MELODY

PETERSEN

 

 

WILMINGTON, Del., June 20 — AstraZeneca, the large pharmaceutical company,

pleaded guilty today to a felony charge of health care fraud and agreed to pay

$355 million to settle criminal and civil accusations that it engaged in a

nationwide scheme to illegally market a prostate cancer drug.

 

The government said the company's employees had given illegal financial

inducements to as many as 400 doctors across the country to persuade them to

prescribe the drug, Zoladex. Those inducements included thousands of free

samples of Zoladex, worth hundreds of dollars each, which the physicians then

billed to Medicare and other federal health care programs, prosecutors said. The

company also gave doctors financial grants, paid them as consultants and

provided free travel and entertainment, the government said.

 

The $355 million that AstraZeneca, a British company, agreed to pay is among the

largest settlements in a heath care fraud case. Of that amount, about $64

million is a criminal fine. The company will pay about $266 million to the

federal government to settle most of the civil accusations. An additional $25

million will go to settle accusations that it defrauded the Medicaid programs,

which are partly financed by the states.

 

The largest fine for health care fraud came in a settlement in October 2001 by

TAP Pharmaceutical Products. It agreed to pay $875 million to settle criminal

and civil accusations that it had engaged in a scheme that largely mirrors the

allegations made by prosecutors against AstraZeneca.

 

" We want doctors to prescribe what is best for their patients and not what is

best for the doctor's bank account, " Richard G. Andrews, first assistant United

States attorney for the District of Delaware, said at a news conference. He and

other prosecutors said the government's action should send a message to all

pharmaceutical companies that such conduct will not be tolerated.

 

Prosecutors said that they did not plan to charge any AstraZeneca employees for

the illegal activities that they say began in 1991 and continued until last

year.

 

" The investigation did not discover any evidence to implicate AstraZeneca's

upper levels of management, " Mr. Andrews said.

 

Mr. Andrews said that AstraZeneca had reported false and inflated prices for

Zoladex to the federal government so that doctors could earn significant profits

by prescribing the drug. Medicare reimbursed the doctors based on the inflated

prices that AstraZeneca reported, he said, while the company charged doctors for

the drug at deep discounts.

 

For example, the company reported to the government that the average wholesale

price for a monthly dose of Zoladex was about $300, prosecutors said, but

doctors were charged about $170 for that dose. That resulted in a $130 profit to

the doctor, the government said.

 

Rachel Bloom-Baglin, a spokeswoman for AstraZeneca, said today that the company

was accepting responsibility for giving doctors free samples of Zoladex with the

understanding that they would bill the government for them. These activities,

which took place from 1993 to 1996, resulted in the criminal charge.

 

But she said that the company disagreed with prosecutors on the other charges,

including the accusation that it had provided false and inflated pricing

information to the government.

 

" We disagree with the government on this, but to put it behind us, we are

agreeing to a settlement today, " Ms. Bloom-Baglin said. " We believe that this is

in the best interest of our company and employees. "

 

" We strongly believe that the pricing for Zoladex was at all times lawful, " she

added.

 

Zoladex is one of a limited number of medicines that doctors buy directly from

drug companies and that Medicare now pays for. Many of these medicines are used

for cancer patients and are administered in doctors' offices.

 

Earlier, the government charged three urologists with conspiring to bill the

free Zoladex samples they received from the company to the federal government.

Two of those doctors have pleaded guilty and await sentencing.

 

" Whether any further doctors should be charged is an ongoing question, " Mr.

Andrews said.

 

The government's seven-year investigation of the marketing of Zoladex began

after an executive at TAP, a competitor, filed a whistle-blower lawsuit against

both TAP and AstraZeneca, prosecutors said.

 

The two companies compete aggressively in the prostate cancer market, with TAP,

a joint venture of Abbott Laboratories and Takeda Chemical Industries, selling a

drug called Lupron. Both drugs are considered equally effective at halting the

production of testosterone, but they are administered differently. Zoladex

consists of tiny pellets that must be injected with a larger needle than that

used for Lupron, which comes in a liquid form.

 

The criminal investigation in the TAP case is continuing. More than a dozen

current and former employees have been charged with conspiracy to pay kickbacks

to doctors, including Alan MacKenzie, who was the president of Takeda

Pharmaceuticals North America at the time of the indictments. One employee has

pleaded guilty; the others have denied any wrongdoing.

 

Several urologists were also charged in the TAP case.

 

The whistle-blower, Douglas N. Durand, a former vice president for sales at TAP,

will receive $47.5 million of the settlement in the AstraZeneca case as allowed

by federal law. Mr. Durand already received $77 million from the TAP case.

 

Lupron has long dominated the market and prosecutors said that was why

AstraZeneca was not forced to pay as high a fine as TAP. Sales of Lupron were

$876 million in the United States last year, compared with $212 million for

Zoladex.

 

The two cases are part of a growing number of investigations and lawsuits into

the marketing practices of pharmaceutical companies. AstraZeneca disclosed

earlier this year that federal prosecutors in Boston had requested documents

about the sale of Prilosec, a drug for ulcers and severe heartburn. The company

also said the Federal Trade Commission was investigating its advertising and

marketing of Nexium, the company's new heartburn drug.

 

Copyright 2003 The New York Times Company

 

 

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