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Forest Laboratories LLC and Forest Pharmaceuticals Inc. Settle Lawsuit Alleging that the Companies Engaged in Physician Kickback Scheme; Agree to Pay $38 Million

Allergen, Plc subsidiaries Forest Laboratories LLC and Forest Pharmaceuticals Inc. (collectively “Forest”) recently entered into a settlement agreement with the federal government and multiple state Medicaid programs to resolve a qui tam lawsuit that alleged that the companies violated the Medicare Anti-Kickback Statute and the False Claims Act. The lawsuit contends that Forest targeted physicians who had a high prescription writing potential and large Medicare and Medicaid patient populations, and paid them to attend lavish speaking engagements where the company had the opportunity to incentivize health care providers to prescribe their products. The lawsuit asserts that Forest’s fraudulent scheme ultimately caused pharmacies to fill prescriptions and submit false claims to government programs for orders that resulted from these illegal kickbacks to physicians. Allergen has agreed to settle the lawsuit for $38 million.

Headquartered in Dublin, Ireland, Allergen (formerly Actavis, Plc) acquired the Forest subsidiaries in June 2014. Forest’s products include Bystolic, a hypertension medication, Namenda, which is used to treat Alzheimer’s disease, Savella, a treatment for fibromyalgia, and Viibryd, an anti-depressant, all of which are medications that the lawsuit alleges Forest paid physicians to prescribe to their patients. In 2010, Forest pled guilty to charges that it illegally marketed two of its pediatric anti-depressant drugs and provided kickbacks to physicians for increased prescriptions. The companies agreed to settle these charges and claims for $313 million.

The most recent qui tam lawsuit was filed in 2012 by Kurt Kroening, who was employed by Forest as a pharmaceutical sales representative from 2007 until 2012. Kroening asserts that Forest routinely hosted expensive events that they framed as speaker engagements in an effort to market their products to health care providers and to promote them for off-label use. Forest paid physicians thousands of dollars to attend these events, regardless of whether they actually presented at them, and also footed the bill for their transportation, lodging, and food expenses. Kroening alleges that physicians conspired with Forest to conceal the kickbacks as speaker fees, and even targeted physicians who predominantly serviced patients whose prescriptions could be reimbursed by government health care programs.

Of the $38 million that the government was able to recover, Kroening, who functioned as the relator, or whistleblower, in the case is set to receive almost $8 million. Such high rewards are not uncommon for individuals who file qui tam lawsuits on behalf of the federal government. If and when a case settles, whistleblowers can receive between 15% and 30% of the amount recovered by the government. If you are aware that a company is committing health care fraud and submitting false and fraudulent claims to the government for payment, the law firm of Tycko & Zavareei LLP may be able to assist you in bringing your own lawsuit under the False Claims Act. If you would like to consult with one of our attorneys, please fill out our Confidential Case Evaluation form, or call (202) 973-0900 to speak with a lawyer within our firm.