In the Spotlight

The government's case was developed from information provided by Douglas Durand, who had been the vice president of sales for TAP Pharmaceuticals (whose information led to the settlement of the government's criminal and civil cases against that company in 2001 for $875 million). As his portion of the settlement proceeds, Durand will receive 17%, or about $47.5 million under the qui tam whistleblower provisions of the False Claims Act. Durand's counsel, Elizabeth K. Ainslie, a partner with Schnader Harrison Segal & Lewis LLP, observed that this payment is on top of more than $77 million paid to Mr. Durand as his portion of the recovery in the TAP cases.

AstraZeneca Pharmaceuticals LP, the major pharmaceutical manufacturer headquartered in Wilmington, DE, pled guilty in a Delaware federal court to conspiring to violate the Prescription Drug Marketing Act (PDMA). (The PDMA was enacted in 1988 to regulate prescription drug marketing practices, such as providing free drug samples to physicians, since the practices could cause the diversion of drugs into gray markets, and incorporated into the federal Food Drug and Cosmetics Act under the 'prohibited acts' section at 21 U.S.C. ' 331(t)). AstraZeneca admitted that it caused claims to be submitted by urologists (who had received free samples from the company) for its anti-prostate cancer drug, Zoladex, to be submitted for reimbursement to federally funded health care programs during an 11-year period (from the beginning of 1991 through the end of 2002), resulting in almost $40 million in losses to these programs.

Under the terms of the global settlement, AstraZeneca paid a $63.8 million criminal fine, and settled its federal civil False Claims Act liabilities by paying $266 million to the government. In the civil cases, the allegations were that AstraZeneca defrauded the government through pricing schemes by which it 'marketed the spread' in its drug cost to physicians ' developed because the company inflated its reported Average Wholesale Price (AWP) for the drug (which Medicare relies upon in calculating the amount reimbursed for drugs (limited to ones administered under a physician's direction) ' while also deeply discounting the price it charged physicians to acquire the drug. The government contended that AstraZeneca's pricing scheme provided improper incentives to physicians so that they would want to prescribe its drug. Two physicians so far have pled guilty to federal conspiracy charges arising from the scheme, while another was charged in May 2003.

Conclusion

The government's case was developed from information provided by Douglas Durand, who had been the vice president of sales for TAP Pharmaceuticals (whose information led to the settlement of the government's criminal and civil cases against that company in 2001 for $875 million). As his portion of the settlement proceeds, Durand will receive 17%, or about $47.5 million under the qui tam whistleblower provisions of the False Claims Act. Durand's counsel, Elizabeth K. Ainslie, a partner with Schnader Harrison Segal & Lewis LLP, observed that this payment is on top of more than $77 million paid to Mr. Durand as his portion of the recovery in the TAP cases.