By Peter Loftus
Drug maker Actavis PLC has held discussions with the Justice
Department about resolving an investigation into the marketing
tactics at a division, including allegations of improper payments
to doctors, according to a regulatory filing and court
documents.
Actavis "has met with the government to discuss the status, and
a potential resolution of, its investigation" of Actavis's Warner
Chilcott unit, Actavis said in its first-quarter report filed with
the Securities and Exchange Commission this week, updating the
status of an investigation that Warner Chilcott first disclosed in
2012, before it was acquired by Actavis in 2013.
Dublin-based Actavis also said it booked a "contingent
liability" for the first quarter in connection with the case, but
it didn't specify the amount. Companies are required under
accounting rules to book such losses when a legal settlement is
probable and they are able to estimate the amount.
Multiple drug companies have settled government investigations
of their sales and marketing practices in recent years, paying
fines and penalties and sometimes pleading guilty to criminal
violations of drug laws. Johnson & Johnson, GlaxoSmithKline PLC
and Pfizer Inc. have paid some of the highest amounts to settle
such probes.
An Actavis spokesman declined to comment beyond the SEC filing.
A Justice Department spokeswoman declined to comment.
The U.S. attorney's office for the District of Massachusetts
sent subpoenas to Warner Chilcott and several of its current and
former employees beginning in February 2012, according to this
week's Actavis SEC filing and a 2012 SEC filing by Warner Chilcott.
The prosecutors sought information about sales and marketing,
payments to people who are in a position to recommend drugs,
medical education, and physician remuneration in connection with
several Warner Chilcott products, Actavis said in its SEC
filing.
The government probe centers on some of the allegations detailed
in a whistleblower lawsuit filed by two former sales
representatives against Warner Chilcott in 2011 in federal court in
Boston, according to a court document filed jointly in that case in
2013 by attorneys for the sales reps and Warner Chilcott, and a
separate court document filed in the case in 2013 by the Justice
Department. The suit alleges the company engaged in fraudulent
marketing of several drugs from 2003 through 2011, including the
ulcerative-colitis treatment Asacol, osteoporosis treatment
Actonel, and birth-control pill Loestrin.
The lawsuit alleges the company paid doctors speaking fees to
induce them to prescribe the drugs, and promoted uses for drugs
that weren't approved by the U.S. Food and Drug Administration,
which caused government health programs to pay for prescriptions
that shouldn't have been paid. The suit alleges the company treated
doctors and nurses to dinners and drinks, dubbing some events as
"nurses night out," to pressure them into prescribing its
drugs.
The suit also accuses Warner Chilcott of instructing sales reps
to help physician practices fill out "prior authorization"
paperwork to gain insurance reimbursement for prescriptions of the
company's products, in violation of federal health-privacy laws.
Warner Chilcott has denied the allegations in court documents.
The former sales reps filed their lawsuit on behalf of the U.S.
government under the federal False Claims Act. A provision of that
act allows people who file such lawsuits to receive a portion of
any resulting recovery by the government, as an incentive to come
forward with information about suspected fraud.
The Justice Department notified a federal judge in 2013 it
wouldn't officially join the lawsuit at that time because it was
still investigating, according to a document it filed in the case.
But the Justice Department asked the court that year to put the
lawsuit on hold to prevent discovery proceedings from interfering
in a continuing criminal investigation of the allegations,
according to the court document jointly filed by attorneys for
plaintiffs and Warner Chilcott. A federal judge granted the stay,
and recently extended it to July 1 at the request of the Justice
Department, according to the court docket.
"Our complaint alleges serious violations of the health-care
laws," Stephen Weiss, an attorney for the former sales reps, said
in an interview. "It stands to reason that the government's
investigation implies they agree with the seriousness of the
allegations. The outcome of that investigation should soon be
known."
As of March 31, Actavis had accrued loss contingencies of $375
million, according to its SEC filing, to account for legal
proceedings and other matters; it didn't break out a total for the
Warner Chilcott case.
Write to Peter Loftus at peter.loftus@wsj.com
Access Investor Kit for GlaxoSmithKline Plc
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=GB0009252882
Access Investor Kit for GlaxoSmithKline Plc
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US37733W1053
Access Investor Kit for Pfizer Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US7170811035
Subscribe to WSJ: http://online.wsj.com?mod=djnwires