AstraZeneca LP reached a $7.9 million settlement with the Department of Justice to resolve allegations that it paid kickbacks to pharmacy benefit manager Medco Health Solutions Inc. for favorable formulary placement of its now over-the-counter heartburn drug Nexium (esomeprazole).

The agreement resolves a qui tam, or whistleblower, suit brought by former AstraZeneca employees in October 2010 and unsealed on Feb. 10.

The government contends that in or about November 2007, Medco requested, and AstraZeneca agreed to provide, “approximately $40 million in remuneration to Medco in exchange for Medco’s recommendation of AstraZeneca’s product Nexium by maintaining Nexium’s ‘sole and exclusive’ status on certain Medco formularies and through other marketing activities related to those Medco formularies,” the settlement agreement states.

The government further contends that Medco received some or all of the $40 million of remuneration through price concessions on AstraZeneca’s Prilosec (omeprazole), Toprol XL (metoprolol) and Plendil (felodipine).

AstraZeneca said in a statement that it denies the allegations. “It is in the best interests of the company to resolve these matters and to move forward with our business of discovering and developing important, life-changing medicines – while avoiding the delay, uncertainty, and expense of protracted litigation,” AstraZeneca stated.

Acting Assistant Attorney General for the Civil Division Joyce Branda said in a Feb. 11 release announcing the settlement that the government will continue to pursue pharmaceutical companies that pay kickbacks to pharmacy benefit managers. “Hidden financial agreements between drug manufacturers and pharmacy benefit managers can improperly influence which drugs are available to patients and the price paid for drugs,” she stated.

Deals Allegedly Prevented Sales Of Authorized Generics To Medco

The complaint, United States ex rel. DiMattia v. AstraZeneca, was brought by Paul DiMattia, former executive director of commercial operations, and F. Folger Tuggle, formerly AstraZeneca’s managed markets account director for Medco, under the False Claims Act. The statute permits private individuals, known as relators, to file suit on behalf of the federal government alleging fraudulent claims for government payments. The plaintiffs receive a share of the settlement if the government intervenes in the suit. DOJ noted that DiMattia and Tuggle will collectively receive $1.4 million.

The suit alleges that AstraZeneca falsely reported the “best price” of Nexium by not properly accounting for quid pro quo financial inducements as Nexium product discounts or rebates and violated a corporate integrity agreement it entered into in 2003. The CIA was part of AstraZeneca’s $355 million settlement with the federal government over allegations of improper pricing and marketing of its injectable prostate cancer drug Zoladex (goserelin).

The company entered into another corporate integrity agreement in April 2010 as part of a $520 million settlement agreement with the federal government and several states to resolve allegations of off-label promotion of its antipsychotic Seroquel (quetiapine) Also see "AstraZeneca's Seroquel Settlement With DoJ Is Fourth Targeting Antipsychotic Off-Label Promotion; Firm Avoids Criminal Charges" - Pink Sheet, 3 May, 2010..

The complaint says AstraZeneca’s senior management agreed to pay Medco $40 million per year, from 2007 through 2010, to maintain Nexium’s preferred formulary position. It states that the company “fraudulently disguised the additional Nexium discounts by providing in-kind kickbacks to Medco via steep discounts in several of AZ’s more ‘mature’ drugs, including Toprol XL, Prilosec, and Plendil – having a value to Medco of $40 million per year from 2007 through 2010.”

The suit says AstraZeneca also entered into an agreement with a generic drug company, identified in an accompanying exhibit as Par Pharmaceutical , under which the company was prohibited from selling its authorized generic of Toprol XL to Medco. Similarly, it says AstraZeneca entered into an agreement with a second generic drug company prohibiting it from selling an authorized generic of Prilosec to Medco.

This is the latest settlement the DOJ has reached involving kickback claims against pharma companies. In January, Daiichi Sankyo Inc. agreed to pay $39 million to resolve claims it paid kickbacks to physicians to induce them to prescribe several of its drugs ([A#28150111001]).

The government is investigating other firms for alleged kickbacks. In December, it filed suit against Omnicare Inc. alleging that the nation’s largest nursing home pharmacy solicited and received kickbacks from Abbott Laboratories Inc. in exchange for purchasing and recommending its anticonvulsant Depakote (divalproex).

The DOJ has also intervened in several suits against Novartis Pharmaceuticals Corp., including a complaint alleging the company paid kickbacks to owners of specialty pharmacies ([A#14140210004]). In another complaint it alleges Novartis paid kickbacks to physicians Also see "Kickback Suit Against Novartis Can Proceed, Judge Says" - Pink Sheet, 2 October, 2014..

AstraZeneca Settles Nexium Kickback Suit; Deals Prohibiting Authorized Generic Sales Alleged

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