Healthy Skepticism Library item: 16248

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Publication type: news

Johnson LA
Appeals court revives whistle-blower suit alleging J&J paid doctors to sell anemia drug
The Chicago Tribune 2009 Aug 13
http://www.chicagotribune.com/business/sns-ap-us-jj-procrit-suit,0,7888796.story

Full text:

A federal appeals court has revived a multibillion-dollar Medicare fraud case brought by whistle-blowers alleging Johnson & Johnson paid doctors kickbacks to prescribe an expensive drug in a strategy to boost sales.

Two former salespeople for the health care giant have been alleging that J&J’s Ortho Biotech Products unit, which sells its anemia drug Procrit, gave doctors kickbacks to write prescriptions for the blockbuster drug during the 1990s. Most of the prescriptions were covered by the federal Medicare health program.

Jan Schlichtmann, attorney for the ex-salesmen, said in an interview Thursday that Ortho Biotech ran “an extensive scheme” in which oncologists and other doctors were given free Procrit, honoraria, speaking fees, “off-the-invoice discounts” and other monetary inducements to give their patients Procrit, particularly after the drug faced competition from rival Amgen Inc.‘s Aranesp.

“Everybody got these discounts. It wasn’t an exception. This was how this drug was marketed and sold,” Schlichtmann, a well-known lawyer who won a water contamination case in Woburn., Mass., detailed in the book and movie “A Civil Action,” told The Associated Press.

Johnson & Johnson spokesman Bill Foster said Thursday that one of the two main claims in the suit was dismissed by the appeals court.

“We are pleased with the Court of Appeals decision (on that claim) and will vigorously defend against the remaining allegations,” Johnson & Johnson spokesman Bill Foster said Thursday. “We intend to seek dismissal of this last remaining claim.”

Procrit was administered as an intravenous injection at doctors’ offices, hospitals and clinics, and those providers would then bill Medicare for the product’s full price. In addition, salespeople induced doctors to increase the amount of Procrit that patients received by one-third more than the approved dose, increasing J&J’s revenue, said Schlichtmann.

Procrit, often prescribed to treat anemia in patients being treated for cancer or AIDS or undergoing kidney dialysis, is a top seller for New Brunswick, N.J.-based Johnson & Johnson. The company reported sales of $2.5 billion last year for Procrit and Eprex, as it is known in some other countries, down from $3.2 billion in 2006. It currently is J&J’s third-best-selling drug.

Competition with rival Amgen Inc. for sales of anemia drugs has long been fierce. But amid concerns that high doses were harming some patients, including causing cancer to progress, the federal government has put restrictions on which patients can get either drug and how much they can take, hurting sales of both Procrit and Amgen’s Aranesp.

Late Wednesday, the 1st U.S. Circuit Court of Appeals in Boston reinstated part of the whistle-blower lawsuit brought by former Johnson & Johnson sales representatives Mark Duxbury and Dean McClellan. The appeals court sent that part of the case, dealing with doctor kickbacks, back to the original court that had dismissed the case, the U.S. District Court in Boston.

The former salesmen and their attorney, Jan Schlichtmann, also had alleged that J&J got doctors to prescribe Procrit for an unapproved use – at a high doses that could be dangerous. The appeals court dismissed that part of the case on a technicality, related to the fact that the bulk of those claims had been made previously in another lawsuit.

“As a practical matter, all (those) facts are going to be available in the case” if it comes to court, Schlichtmann said. Schlichtmann said the case could turn out to be one of the biggest Medicare fraud cases ever, involving more than $3 billion in posssibly fraudulent Medicare claims.

“We knew what Ortho Biotech and Johnson & Johnson were doing was wrong and we risked our careers to stand up to say so,” said Duxbury, the lead plaintiff. “I am glad to see the appeals court realize we are entitled to whistle-blower protection and hope the Justice Department sees fit to intervene” in the case.

Foster, the J&J spokesman, said the Justice Department had examined all the allegations but declined to participate in the case.

Justice Department spokeswoman Beverly Lumpkin said Thursday evening they she could not say whether the government will intervene in the case.

Lumpkin said the largest Medicare fraud case to date involved a combination of $1.7 billion in criminal and civil penalties paid in 2003 by HCA Inc., formerly known as Columbia/HCA, a Nashville-based operater of hospitals and ambulatory surgery centers. That case involved paying physicians kickbacks and overcharging Medicare, Medicaid and Tricare, the military health care program.