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Last month, a New York federal court awarded two whistleblowers a 29% relator share of a multi-million dollar False Claims Act settlement. Teva Pharmaceuticals USA (“Teva”) and two of its subsidiaries agreed to pay $54 million to the federal and state governments. The case involved allegations that it used sham speaker programs to induce physicians to prescribe Teva’s drugs. The drugs included Copaxone (a Parkinson’s disease drug) and Azilect (a Multiple Sclerosis drug).
The whistleblowers, known as “relators” under the False Claims Act (“FCA”), are former sales representatives who worked for the Teva subsidiaries. They alleged that Teva paid doctors $1,500 to $2,700 each to give presentations at its speaking events about Copaxone and Azilect. According to the complaint, Teva made these payments in order to get the doctors to prescribe those drugs to patients.
Under the Anti-Kickback Statute, it is a crime to knowingly or willingly offer or pay “remuneration” in order to induce someone to recommend purchasing a drug covered by a “Federal health care program.” 42 U.S.C. § 1320a-7b(b)(2). Doctors who write prescriptions for a drug after receiving kickbacks cause pharmacies to false submit claims to the government. Such claims induced by fraud violate the False Claims Act.
Relators filed their original qui tam complaint in May 2013. In November 2014, the Department of Justice informed the court that it would not be intervening in the case. After the court unsealed the case in March 2015, relators and their counsel went forward on their own, pursuing claims on behalf of the United States and various states.
Years of litigation followed, including substantial discovery and motion practice. Relators defeated Teva’s motions to dismiss and for summary judgment and were preparing for trial when the case finally settled. In a 70-page summary judgment decision, the court recited some of the evidence amassed by relators showing that the speaker programs were designed only to induce prescriptions. This included evidence that Teva was tracking speakers’ prescription-writing practices in order to reward high-volume prescribers with paid speaking engagements. In addition, the court noted substantial evidence that Teva repeatedly presented the same programs to the same attendees. In some cases, it paid physicians as speakers. Other times, those same physicians were in the audience while other physicians presented. Had the whistleblowers not persisted in their fight, this eye-opening evidence may never have come to light.
In cases where the government intervenes, the FCA provides for a relator share of 15-25%. However, where the government declines to intervene and relators go forward on their own (as here), the award is 25-30%. Consequently, this increased share recognizes that litigating a declined case is expensive and time-consuming. Thanks to the courage and determination of relators and their counsel, Teva paid $54 million dollars to the Government. Therefore, in recognition of their efforts, the court gave the relators a near-maximum share (29%), awarding over $14.5 million.
Congratulations to the whistleblowers and their counsel on an outstanding and hard-earned result.