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Benicar maker settles whistleblower lawsuit for $39 million

Daiichi Sankyo Inc. pays $39 million for allegedly violating anti-kickback law

Japanese drug maker Daiichi Sankyo, Inc. has been ordered to pay $39 million to settle allegations it violated the Anti-Kickback Statute by paying physicians illicit fees to speak at lavish entertainment events that promoted blood pressure medications such as Benicar. Benicar is also sold as Azor, Tribenzor, Benicar HCT, and Welchol.

The qui tam case was filed in March 2010 under the False Claims Act by whistleblower Kathy Fragoules, a former sales representative.  The False Claims Act allows citizens with evidence of fraud to come forward and file suit on behalf of the government to recover monetary damages.  Whistleblowers can receive between 15 and 30 percent of money recovered.

Millions awarded to False Claims Act whistleblower

Ms. Fragoules will receive more than $6.1 million of the $36 million settlement for her contribution in reporting Daiichi Sankyo’s violations of the Anti-Kickback Statute.  States involved in the case will receive $5 million of the $39 million settlement.

The suit, U.S. ex rel Fragoules v. Daiichi Sankyo Inc. No. 10-10420, was filed in the U.S. District Court for the District of Massachusetts.  The Federal Bureau of Investigations, the Department of Veterans Affairs, Department of Defense Criminal Investigative Service, and the Department of Health and Human Service were conducting active investigations into Daiichi's alleged kickbacks prior to the settlement agreement.

Anti-Kickback Statute violations

The Anti-Kickback Statute was enacted to ensure a doctor’s medical judgement would not be compromised by improper gifts or payments.  The Anti-Kickback Statute forbids companies from offering gifts or money to doctors in order to induce referrals for medical services covered by federal programs.  These medical services include those offered by Medicare and Medicaid.

In her whistleblower lawsuit, Fragoules alleged Daiichi Sankyo created a system of payments and rewards for physicians who participated in its so-called “Physician Opinion Discussions” (POD).  Cooperating doctors were paid $500 per session to be the honoraria at company-funded events and speak to approximately three to four other physicians. The speaking physician recommended prescribing pharmaceuticals manufactured by Daiichi Sankyo.

The doctors chosen to become the honoraria were selected for their consistency in prescribing certain brands of medication.  The POD members would take turns as honorarium and give redundant speeches on the same topic.

The speeches occurred between 2004 and 2011, taking place at lavish, expensive dinners where only a few other doctors, their spouses, and staff were present.  Federal prosecutors indicated that the expenses incurred by Daiichi Sankyo exceeded its own in-house cost limitation guidelines.  In some cases, the physicians were paid even when the events were cancelled.

False Claims Act whistleblower settlement

As part of its settlement with federal authorities, Daiichi Sankyo entered into a Corporate Integrity Agreement with with the Department of Health and Human Services.  The agreement obligates Daiichi Sankyo to enact internal reforms over the course of five years.

If you have knowledge of a corporation or healthcare provider defrauding the federal government, you may be entitled to substantial compensation under the False Claims Act.  For more information, please visit our whistleblower and qui tam claims page or call us at 202-682-5800.


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