Abbott subsidiary settles cholesterol drug suit for $41M

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Kos Pharmaceuticals, a subsidiary of Abbott Laboratories, has agreed to pay more than $41 million to resolve criminal and civil liability arising from conduct relating to its cholesterol drugs niacin XR/lovastatin (Advicor) and niacin (Niaspan), the Department of Justice (DoJ) reported.

The Cranbury, N.J.-based Kos will pay more than $38 million to settle civil allegations under the False Claims Act. Specifically, the civil settlement resolves allegations that Kos offered and paid doctors, other medical professionals, physician groups and managed care organizations illegal kickbacks in the form of money, free travel, grants, honoraria and other valuable goods and services, in violation of the Anti-Kickback Statute to get them to prescribe or recommend Niaspan and Advicor.

In addition, the DoJ alleged that Kos promoted the sale and use of Advicor for use as first-line therapy for management of mixed dyslipidemias. However, this off-label use was not approved by the FDA, nor was it a medically-accepted indication for which the U.S. and state Medicaid programs provided coverage. The federal share of the civil settlement is $33,705,310 and the state Medicaid share is $4,454,432.

According to the criminal information, Kos conspired to violate the statute by agreeing to pay physicians kickbacks in exchange for their writing prescriptions for its drugs.

Specifically, the DoJ reported that two doctors proposed that they would endorse the use of Kos products, including Advicor, for the treatment of cholesterol in exchange for a series of payments. Between January 2002 and June 2006, one of the doctors wrote 4,130 prescriptions for Kos products. According to the court documents, some of those prescriptions were paid for by Medicare and Medicaid. From 2002 to 2004, Kos made a series of payments to the two doctors or a third-party intermediary in the form of “sponsorship” of continuing medical education classes conducted by the doctors and purported speakers’ fees. Kos has agreed to pay a $3.36 million criminal fine as a condition of the deferred prosecution agreement.

The civil settlement resolves two lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens with knowledge of fraud to bring civil actions on behalf of the U.S. and share in any recovery, according to the DoJ. As a part of today’s resolution, the whistleblowers, all former employees of Kos, will receive payments totaling more than $6.4 million from the federal share of the civil recovery.