Former Executive at Allergan Unit Arrested on Kickback Charge

Warner Chilcott to also settle charges stemming from investigation into its marketing

By 

PETER LOFTUS

Updated Oct. 29, 2015 10:18 p.m. ET

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In a rare move against a pharmaceutical executive, federal agents arrested the former president of an Allergan PLC division Thursday on a charge of conspiring to pay kickbacks to physicians to induce them to prescribe the company’s drugs.

A grand jury in the U.S. District Court for the District of Massachusetts indicted Carl Reichel, who served as president of Warner Chilcott’s pharmaceuticals division between 2009 and 2011, on one count of conspiracy to violate the federal anti-kickback statute. Allergan, formerly known as Actavis, acquired Warner Chilcott in 2013.

In a related move, Warner Chilcott agreed to plead guilty to a criminal charge of health-care fraud, which Allergan said was related to certain Warner Chilcott sales and marketing practices before the 2013 acquisition. Warner Chilcott will pay $125 million to resolve criminal and civil liability arising from its promotional practices for the osteoporosis drug Actonel and several other drugs, the Justice Department said on Thursday.

Allergan said it cooperated with the government’s investigation, and has previously recorded charges covering the settlement amount.

The Justice Department alleged that Mr. Reichel, 57, of Chester, N.J., instructed his sales force to provide free meals and speaker fees to doctors to prod them to prescribe Warner Chilcott drugs, including Atelvia for osteoporosis. Mr. Reichel pleaded not guilty in federal court in Boston Thursday afternoon and was released on his own recognizance.

Joseph Savage, an attorney for Mr. Reichel, said the charges are false. “For more than 30 years in the pharmaceutical industry Carl Reichel worked hard and did the right thing and these baseless claims can’t change that,” Mr. Savage wrote in an email.

The conspiracy charge carries a maximum sentence upon conviction of five years in prison, though actual sentences are typically less than the maximum.

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While several drug companies including GlaxoSmithKline PLC and Johnson & Johnson have paid big settlements to settle investigations of marketing practices and other conduct in recent years, few individual executives have been charged criminally. In 2011, Marc Hermelin, former chief executive of K-V Pharmaceutical Co., was sentenced to 30 days in prison in connection with the company’s shipment of oversized painkillers.

Antifraud activists have said even costly corporate settlements haven’t been enough to deter drug makers from misconduct, and that criminal cases against executives could make a difference.

“This is a red letter day for integrity. This needs to happen more often,” said Patrick Burns, head of Taxpayers Against Fraud Education Fund, a nonprofit antifraud group in Washington.

The Justice Department also said Thursday that two other former sales managers for Allergan’s Warner Chilcott unit pleaded guilty in July to charges of conspiracy to commit health fraud and await sentencing. Another former employee was charged this month with illegally disclosing patient health information; a plea hearing is set for November, the Justice Department said.

The government probe of the company and certain employees centered on some of the allegations detailed in a whistleblower lawsuit filed by two former sales reps against Warner Chilcott in 2011 in federal court in Boston, according to court documents. The suit alleged the company engaged in fraudulent marketing of several drugs from 2003 through 2011.

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 whistleblowers will receive about $22.9 million from the federal share of the settlement, the Justice Department said. “Our clients risked their careers to help DOJ with the investigation,” Scott Simmer, one of their attorneys said in a written statement. “It’s deeply gratifying that their perseverance and dedication is finally coming to light.”

—Chelsey Dulaney contributed to this article.

Write to Peter Loftus at Peter.Loftus@wsj.com

The multi billion dollar elder cleansing industry has been allowed to entrench itself everywhere in health care.     It is an open secret that in every aspect of the health care industry elder cleansing is fostered.     Kickbacks to doctors, corrupt judges, corrupt lawyers, corrupt judicial officials, corrupt public officials ***** is as common as white bread

The blog MARYGSYKES reported that one nursing home chain had the temerity to offer openly $2000.00 to the public for referrals.    Guardians who are appointed by the Court openly own interests in nursing home that they incarcerate their charges.    For the multiple breaches of their fiduciary duty Guardians (including GALs) receive bloated fees for un-necessary make work activities.    

It is commonplace for protected estates to be dissipated with the assistance of ultra vires Court orders entered by venal and corrupt judges.    In the same Wall Street Journal edition some of the pernicious conduct is detailed.      

Health care carries a 700% fraud surcharge.      Omicare was reported to be purchased by CVS for 12.9 billion dollars.   Omicare is reported to be a major supplier of pharmaceuticals to nursing homes and is believed to be a vehicle of some major nursing home operators for enhancing their income.

IT IS INDEED INTERESTING WHEN JOANNE DENISON AND I  REQUESTED FROM LAW ENFORCEMENT AN HONEST INVESTIGATION,   THE LAWYER DISCIPLINARY COMMISSION (IARDC) tried to silence us.    A lawyer employed by the Illinois Attorney disciplinary Commission (IARDC) wrote to the Supreme court  of Illinois complaining that such was akin to yelling fire in a crowded theater.

IT IS TIME FOR AN HONEST INVESTIGATION OF THE GUARDIANSHIP FRAUD AND THE COVERUP OF THE SAME BY EQUALLY CORRUPT DISCIPLINARY OFFICIALS SUCH AS JEROME LARKIN.

Ken Ditkowsky