It Takes Two to Tango (or to Bribe): Big-Time Crime in the Pharmaceutical Industry with the Help of Doctors

In 2001, TAP Pharmaceutical Products, an international pharmaceutical company jointly owned by the Japanese company Takeda Chemical Industries and U.S.-based Abbott Laboratories was successfully prosecuted and agreed to pay a $290 million criminal fine, the largest criminal fine ever in a health care fraud case, and to plead guilty to the charge of conspiring to violate the federal Prescription Drug Marketing Act (PDMA). TAP admitted that it provided free samples of leuprolide (LUPRON), a drug for treating prostate cancer, to physicians, knowing that those physicians would seek and receive reimbursement for the samples. The plea agreement specifies that the parties estimate that the loss to the United States from TAP’s criminal conduct was approximately $145 million.

There was also a settlement of civil litigation in which TAP paid approximately $560 million to the United States and $25.5 million to the fifty states and the District of Columbia to settle a federal civil False Claims Act for total criminal and civil penalties of $875 million. Lupron, unlike most drugs, is reimbursed in part by governmental programs including Medicare and Medicaid, because it must be injected under the supervision of a physician.

Among the activities the United States government alleged gave rise to such liability was TAP’s knowing provision of various things of value to certain physicians and health maintenance organizations in order to induce them to order leuprolide.

For bribing schemes to be successful, as this one certainly was, doctors must agree to be bribed and, if prosecution is to be really successful, doctors must also be prosecuted along with the bribing company and its employees.

In addition to announcing the settlement with TAP, a federal grand jury indictment was also unsealed on October 12, 2001 related to the investigation. The indictment charged one physician and six TAP employees with various health care fraud crimes. Included in the indictment were charges against the TAP defendants of conspiracy to pay kickbacks to doctors and other customers in violation of the federal Anti-Kickback statute, conspiracy to defraud state Medicaid programs in violation of TAP’s obligation to sell products at its best price, and conspiracy to violate the PDMA by causing free samples to be illegally billed. The indictment also charges that one of the TAP defendants provided illegal remuneration, in the form of debt forgiveness, free samples, and educational grants, to health care providers in violation of the Anti-Kickback statute so as to induce them to order Lupron. One physician was charged with the illegal selling of samples of Lupron to patients.

Previously, four other physicians pled guilty in this investigation. Three of the doctors pled guilty to conspiring to bill for free samples, and the fourth pled guilty to conspiring to violate the Anti-Kickback statute for demanding to receive free samples in exchange for switching patients to Lupron.

In a related investigation, two Florida doctors have been convicted of criminal charges for their part in a black market leuprolide selling operation. The doctors were charged by the United States Attorney for Connecticut with ordering more of the drug than they required for their practices and then selling the drug at a profit to other doctors. Profits were made because of differences in the way TAP priced leuprolide in different states.

Now, in the spring of 2004, the legal action continues. Although physicians are not, themselves, now on trial, their role in the bribing schemes is prominent. According to reporter, Bruce Japsen, writing in the Chicago Tribune, “their behavior provides an insight into a rampant gift culture in medicine in which, according to several studies and even admission by the American Medical Association, the choice of medication patients are prescribed can be influenced by the gifts doctors receive.”

Japsen pointed out that in the trial of 11 current or former sales staffers of TAP Pharmaceutical Products Inc. in Boston federal court, prosecutors and witnesses have said that physicians extracted gifts by threatening to switch patients from TAP’s Lupron — a prostate cancer drug that costs more than $400 a dose — to a rival drug, gosorelin (ZOLADEX), that was $100 a dose cheaper and just as effective.

At least one doctor, according to testimony, wrote out a list of what he wanted. A Cleveland urologist allegedly provided TAP’s sales staff with a list of perks he wanted during the mid to late 1990s. Prosecutors said the doctor, who they claim purchased nearly $1 million of leuprolide annually, demanded company-paid airline tickets and trips to resorts. He also charged more than $7,000 to the credit card of a TAP sales representative for dinners for himself and his physician friends, prosecutors said. “He was a doctor who always had his hand out,” said Susan Winkler, an assistant U.S. attorney in Boston. “He kept threatening to switch to Zoladex. He always wanted something.”

Instead of patients being prescribed the safest, most effective, least expensive drugs, the prescribing decision is distorted by golf, money, and other kinds of inducements by those doctors who are willing to be bribed. If the prescription involves a patient whose prescription is being paid for by Medicaid or Medicare, it is illegal for doctors to accept anything of value in exchange for prescribing a particular drug.

If prosecutors can prove that a doctor or nurse practitioner prescribed a drug in exchange for cash or other gratuities, they could prosecute the case under the so-called antikickback statute that applies to Medicare or Medicaid fraud. This is one of several federal laws under which companies or individuals can be prosecuted as described in the above case study involving TAP.

What You Can Do

Although it may seem to be a difficult topic for discussion with your doctor, you might just ask him or her what they think about doctors accepting gifts of any sort from the pharmaceutical industry. You can say you have read about it and just wondered what they thought. The most thoughtful and ethical physicians will be troubled by this and will tell you that they do not accept such gratuities. Other physicians need to know their patients are worried about this. Such discussions are part of a truly open and honest doctor-patient relationship.