December 8, 2010
Office of The Attorney General
– Paula T. Dow, Attorney General
Division of Criminal Justice
– Stephen J. Taylor, Director
Office of the Insurance Fraud Prosecutor
– Riza Dagli, Acting Insurance Fraud Prosecutor
Media Inquiries-
609-292-4791
Citizen Inquiries-
609-292-4925
KOS Pharmaceuticals to Pay $9.4 Million to State Medicaid Programs to Settle Claims of Off-Label Marketing and Kickback Violations
New Jersey’s Medicaid Fraud Control Unit Led Negotiations
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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