Warner-Chilcott Sales Reps Allege Fraud
March 12th, 2013 // 3:28 pm @ jmpickett
In one of the more expansive whistleblower lawsuits to be filed against a drugmaker, a pair of former Warner-Chilcott sales reps have detailed numerous means in which they allege fraud was committed in order to boost sales of various prescription drugs.
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Many of the charges appear familiar – offering kickbacks in the form of meals, gifts, honey-baked hams, pheasant hunting and golf outings to physicians, for instance. But the lawsuit, which was filed in federal court in Boston and recently unsealed, also contains interesting details about alleged instructions from upper management as well as numerous alleged schemes.
These included having reps fill out prior authorization forms, which also meant the drugmaker was allegedly violating patient privacy laws; distributing all sorts of clinical studies that were downloaded from the Internet, as opposed to sanctioned studies that only discussed approved uses for medicines; offering inducements to members of committees that decided formulary placement for insurers; encouraging doctors to use coupons for Medicare beneficiaries, and deliberately hiring, young inexperienced reps to avoid pushback from experienced reps about tactics.
At issue were efforts to increase prescriptions for several drugs – the Actonel and Atelvia osteoporosis meds; the Asacol treatment for ulcerative colitis; the Doryx antibiotic for acne; the Loestrin and Femcon oral contraceptives, and the Enablex drug for overactive bladder. These same drugs were the subject of a subpoena issued last year by the US Attorney in Boston (see this). The suit alleges that federal and state government healthcare programs unncessarily overpaid for the drugs as a result of the schemes.
We asked Warner-Chilcott for comment and will update you accordingly.
So what tactics were pursued? For one, the reps were allegedly told to pay for ‘happy hours’ for physicians and their staffs, but to “beat doctors into the ground†and “call doctors on their shit†if they subsequently failed to prescribe Warner-Chilcott drugs or maintain they were doing so when IMS Health data indicated otherwise.
Similarly, reps were also pressured to line up physicians as speakers and offer as much pressure as possible to convince doctors to prescribe more Warner Chilcott drugs in exchange for speaking engagements, according to the lawsuit. Reps were encouraged to host dinners at expensive restaurants that were billed as ‘Med Ed’ meetings, but were really informal meals.
For example,on March 23, 2010, one rep was directed by a manager to host a club for 10 gastroenterologists intestinal (“GIâ€) physicians, including at an upscale steakhouse in Bingham Farms, Michigan. But “there was no serious clinical discussion of Asacol HD or any other Warner Chilcott product.†Instead, the rep promoted the drug individual physicians “on the side,†according to the lawsuit. The bill was $1,264.
Each rep had a budget of $15,000 to $20,000 per month, or as much as $240,000 per year, for Med Ed programs. This is nearly 19 times higher than the industry average for such events, the lawsuit claims. Although the drugmaker tracked spending by brand, there was no spending limit, which means a rep could have spent his or her entire budget to take doctors out to dinner to promote just one drug. And reps had to hold at least 12 after-hours events each month.
And reps were allegedly encouraged to fudge expense reports so that any compliance questions could be deflected. One example mentioned: an internal Warner Chilcott expense report auditor informed a rep that to keep the food-to-alcohol ratio at his Med Ed events in line with official company policy, he should order an extra meal or appetizer and claim on his expense report that more staff were in attendance, according to the lawsuit.
Similarly, strict state laws on gifts in Minnesota, Maine and Vermont were circumvented. How so? The drugmaker Warner Chilcott “altered its accounting and expense reporting practices,†the lawsuit alleges. When the law prohibited dining out but allowed meals in doctor offices, reps arranged for restaurants to mark meals as take out, even though they were not.
“When the amounts of gifts and meals exceeded state law limits set, district and regional managers told their sales representatives to use creative accounting… such as charging dinners and gifts against a general expense code or as room charges, as well as not allocating the expenses by physician or overstating headcount in order to dilute the per capita cost,†the suit alleges.
Reps who did not comply with instructions to wine and dine were routinely fired. In fact, after Warner-Chilcott bought Procter & Gamble Pharmaceuticals in 2009, the drugmaker began firing reps who were in the bottom 30 percent of performers and all medical science liaisons were dismissed, but never replaced. Any rep who complained about perceived illegalities was “packaged out,†a term for dismissal with severance and an agreement not to discuss company practices.
The lawsuit, which cites numerous internal e-mails and voice mails from Warner-Chilcott executives and managers, recounts one comment from Carl Reichel, who was pharmaceuticals president until August 2011. Sales reps, he said, were “soccer balls.†Which meant they had to be kicked to get moving and, when they stop, needed to be kicked again. And when they run out of air, get a new soccer ball.
In the year of the Procter & Gamble acquisition, Warner Chilcott (WCRX) fired or “packaged out†most of the 700 reps who were inherited. “These firings were largely driven by senior management’s belief that P&GP representatives were not willing to engage in the illegal practices that formed the crux of Warner Chilcott’s business model,†the lawsuit alleges. And Amber Boissonneault, who headed the gastroenterology division, allegedly referred to legacy P&G reps as “pussies†during a managers meeting in or around July 2011.
Yet, the drugmaker appeared lax when reps crossed a line. For instance, one rep used used her phone to record a video of a nurse in her territory extolling the virtues of Atelvia while showing how easy it was to complete a prior authorization. Her manager posted the video to YouTube, which drew an FDA warning letter (back story). The manager was fired, but the rep was not reprimanded.
There were other alleged shenanigans. One physician, who earned $216,000 in honoraria for 72 speaking engagements in 2010, gave a talk entitled “How to Increase Revenue and Decrease Jail Time.†The discussion focused on the fine art of submitting Medicare and Medicaid reimbursements, although it was billed as a chat about one particular drug. Instead, the drug was mentioned for about five minutes during the end of the hour-long-plus meeting.
The lawsuit goes on to allege that “Warner Chilcott’s official training materials have instructed reps not to mention the existence of the prior authorization process and not to participate in the completion of prior authorizations, in practice sales representatives have done both. Indeed, management has instructed reps to actively manipulate the prior authorization process to increase sales.â€
One rep on Long Island, New York, Romero allegedly “set up a fax machine in his house so that doctors’ offices can simply fax patients’ information to his wife, who has filled out the prior authorization requests and then faxed them to the insurance companies or benefit providers,†according to the lawsuit.
Moreover, Warner-Chilcott execs boasted they were able to circumvent various curbs on their practices because the drugmaker was not a signatory to the voluntary PhRMA industry code, which addresses such things as meals, gifts and promotional speaking.
“For example, at a meeting held in Chicago, Illinois in September 2009 at which Warner Chilcott’s senior management met with the 400 to 500 P&GP representatives that Warner Chilcott would soon be acquiring, a representative asked Reichel how Warner Chilcott was allowed to take doctors and their staffs out two to three nights per week without violating the PhRMA code. Reichel responded: We can do it because we weren’t foolish enough to become a member of PhRMA. He continued: We are a European company,†the lawsuit states.
