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The U.S. government joined a whistleblower lawsuit accusing the Salix unit of Valeant Pharmaceuticals International Inc of paying illegal kickbacks to doctors to induce them to prescribe its products, and submitting false claims for the products to Medicaid and Medicare.
According to a filing made public on Thursday in the U.S. District Court in Manhattan, the alleged improper conduct occurred from January 2009 to December 2013, predating Valeant’s purchase of Salix last year.
Today the suit was settled for $54 million.
The settlement resolves claims that SALIX violated the federal Anti-Kickback Statute and False Claims Act by using its “speaker programs” as a mechanism to pay kickbacks to doctors to induce them to prescribe SALIX drugs and medical devices that were reimbursed by federal health care programs. Specifically, the United States’ Complaint-in-Intervention alleges that SALIX held sham speaker programs, frequently at high-end restaurants, where doctors were paid substantial honoraria purportedly to educate other doctors about a Salix product, but in reality spent little or no time discussing the product. The settlement will also resolve numerous state law civil fraud claims.
This suit predates Valeant’s relationship with Philidor, the secret specialty pharmacy that sold exclusively Valeant products until January. Its existence was revealed in October when a short seller brought up some weird inconsistencies in Valeant’s accounting.
Valeant is also being investigated for alleged criminal activity at Philidor. Specifically, authorities are looking into whether or not Philidor employees were instructed to commit fraud in order to get insurance companies to pay for Valeant medications they would otherwise reject.
Since Philidor became public, its troubles, plus government scrutiny over Valeant’s drug price hikes, combined to bring the company’s stock down 90%.
(Reuters reporting by Jonathan Stempel in New York; Editing by Tom Brown)