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TRENTON
- Attorney General Paula T. Dow and Criminal
Justice Director Stephen J. Taylor announced
today that New Jersey has joined with other
states in reaching an agreement with Kos
Pharmaceuticals, Inc., to settle allegations
that the company engaged in kickback violations
and off-label marketing of its cholesterol
treatment drugs, Advicor and Niaspan.
According
to Acting Insurance Fraud Prosecutor Riza
Dagli, New Jersey’s Medicaid Fraud
Control Unit led the negotiations that resulted
in the settlement, along with California’s
Medicaid Fraud Control Unit. Kos will pay
the state Medicaid programs a total of $9,477,567,
which will be allocated to the states and
the federal government based on their joint
funding of the Medicaid program. The total
share for the states is $4,454,432, and
New Jersey’s recovery is $87,343.
This
state settlement is part of a larger settlement
reached between the U.S. Attorney’s
Office for the Eastern District of Wisconsin,
the U.S. Attorney’s Office for the
Western District of Louisiana and the U.S.
Department of Justice. The total settlement
is $41,519,742. This includes the $9,477,567
Medicaid portion and a $28,682,175 component
to settle civil claims for damages to the
Federal Employees Health Benefits Program,
TRICARE and Veterans’ Administration
programs. There is also a $3,360,000 criminal
fine based on Kos’ entering into a
deferred prosecution agreement with federal
authorities.
Kos
manufactured and sold two prescription drugs
that treat low levels of HDL, commonly known
as “good cholesterol.” The brand
names of these drugs are Advicor and Niaspan.
During most of the time period of this investigation
Advicor and Niaspan were the only drugs
available that worked to increase good cholesterol
levels. Treatment regimens with medication
seek to raise the level of HDL, and to lower
the level of bad cholesterol or “LDL.”
The
allegations resolved by the settlement are
that between January 2001 and December 2006,
Kos engaged in off-label marketing of Advicor
and paid kickbacks to doctors regarding
Niaspan through the use of quality initiatives,
coupon programs, preceptorships, and local
advisory boards. Advicor was approved by
the U.S. Food and Drug Administration as
an adjunctive or second-line therapy after
diet and lifestyle changes and other medications
failed to lower overall cholesterol levels.
Kos marketed Advicor as a first-line therapy,
which was not a use approved by the FDA.
Kos
was purchased by Abbott Laboratories in
December 2006. In recognition of the fact
that shortly after Kos was purchased, Abbott
took steps to correct the offending conduct,
the federal government did not require Kos
to enter into a corporate integrity agreement,
as is customary in these cases. Abbott represented
that there are no current marketing efforts
by Kos relating to Advicor and Niaspan.
The parties agreed that if Kos initiated
marketing efforts regarding Advicor and
Niaspan, a corporate integrity agreement
would be implemented.
This settlement agreement is based on two
cases filed under the False Claims Act by
relators, private parties who file actions
under state and federal False Claims statutes
on behalf of the government. These are called
qui tam cases. Two cases were filed in U.S.
District Court, one in the Eastern District
of Wisconsin and one in the Western District
of Louisiana. The third matter was filed
in state court in New York.
The
states were represented in this negotiation
by a team of state prosecutors from the
New Jersey and California Medicaid Fraud
Control Units. Attorney General Dow expressed
appreciation to Assistant Attorney General
John Krayniak for heading this national
team and to Technical Assistant B’leia
Williams for handling all data analysis
of Medicaid claims that contributed to this
settlement. Both are assigned to the Medicaid
Fraud Section of the Office of the Insurance
Fraud Prosecutor, within the Division of
Criminal Justice.
Attorney
General Dow noted that many cases alleging
Medicaid fraud are being filed under New
Jersey’s False Claims Act. She explained
that the New Jersey False Claims Act, like
the federal False Claims Act, contains a
whistleblower provision to provide rewards
to people, often corporate insiders, who
blow the whistle on fraud. New Jersey administers
the Medicaid program through the Division
of Medical Assistance and Health Services
in the Department of Human Services. OIFP’s
Medicaid Fraud Control Unit investigates
fraud and abuse in the Medicaid program.
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