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Former big pharma president indicted for nationwide kickback scheme, company pleads guilty

The DOJ unsealed an indictment Thursday charging the former president of drug maker Warner Chilcott with one count of conspiring to pay kickbacks to doctors across the United States. 

W. Carl Reichel, 57, of Chester, New Jersey, was arrested Thursday in Boston.

The DOJ said Reichel’s sales strategy was to provide doctors with free dinners, phony speaker fees, and food and drink so they and their stafff would prescribe Warner Chilcott drugs.

The indictment said,

It was part of the conspiracy that Reichel provided the sales representatives with virtually unlimited expense accounts to take [doctors] out for free dinners, misleadingly referred to as “medical education programs” or “med eds.”

Reichel required sales representatives to do med eds or roundtables at least twice a week, the DOJ said. They were usually held at expensive restaurants.

Reichel budgeted up to $125 per person for the events, and allowed the doctors and sales reps to bring their spouses or significant others, the DOJ said.

Reichel told his sales force to sign up high-prescribing doctors as paid “speakers” for Warner Chilcott, the DOJ alleged.

The indictment said,

The “speakers” were paid between approximately $600 and $1,200 for attending the free dinners. Even though these dinners included a “speaker,” unlike speaker events at other pharmaceutical companies, Reichel communicated that the Warner Chilcott “speaker” events should be roundtables: informal dinners without a clinical lecture.

Also on Thursday, a subsidiary of New Jersey-based Warner Chilcott pleaded guilty to a criminal count in federal court in Boston. It admitted paying kickbacks to doctors throughout the United States to induce them to prescribe its drugs.

Warner Chilcott is now part of Botox maker Allergan plc.

The company also admitted manipulating marketing claims for drugs so insurance companies would authorize payments for prescriptions.

Warner Chilcott agreed to pay $125 million to resolve its criminal and civil liability arising from the illegal marketing of the drugs Actonel®, Asacol®, Atelvia®, Doryx®, Enablex®, Estrace® and Loestrin®.

Under the terms of the plea agreement, Warner Chilcott will pay a criminal fine of $23 million.   

In the civil settlement, the company will also pay $102 million to the federal government and the states to resolve allegations it violated the federal Anti-Kickback Statute. 

It’s illegal to offer or pay doctors to prescribe drugs even partly paid for under a federal health care program.

The federal share of the civil settlement is $91.5 million, and the state Medicaid share of the civil settlement is $10.6 million.

The civil settlement resolved a lawsuit filed under the whistleblower provisions of the False Claims Act. The lawsuit was United States ex rel. Alexander, et al. v. Warner Chilcott plc, et al., Civil Action No. 11-CA-1121 (D. Mass.). 

The DOJ said the whistleblowers who filed the suit will receive $22.9 million from the federal share of the civil recovery. The government didn’t say how many whistleblowers were involved.

Before Thursday, two individuals had pleaded guilty to criminal offenses in the case, and two others had been charged.

Former district managers, Jeffrey Podolsky, 49, of East Meadow, New York, and Timothy Garcia, 35, of Los Gatos, California, pleaded guilty to conspiracy to commit health care fraud and violations of the Health Insurance Portability and Accountability Act (HIPAA). 

A third former district manager, Landon Eckles, 30, of Huntersville, North Carolina, was charged earlier this month for criminal HIPAA violations relating to the alleged insurance authorization scheme. 

Last week, Dr. Rita Luthra, 64, of Longmeadow, Massachusetts, was charged with accepting free meals and speaker fees from Warner Chilcott in return for prescribing its osteoporosis drugs.

The DOJ’s criminal indictment against Carl Reichel is here (pdf).


Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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  1. Always happy to read about legal actions relating to white-collar crime. I wonder however what sanctions are actually imposed and executed against corporate malefactors, especially those in the C-suite. It would be interesting to know what fines were charged against Reichel, and if he actually paid them? Did he also have to repay performance bonuses from prior years? And so forth.

  2. And to think that I interviewed for a position at this company. I am pleased to see that these corrupt employees were prosecuted.

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