Cashing in on dementia patients: drugmaker to pay $116 million in fraud settlement

(CNN)A pharmaceutical company that whistleblowers alleged paid doctors to prescribe its main drug and urged salespeople to push it as a way to control unruly dementia patients will pay more than $100 million to settle government fraud allegations.

The Department of Justice announced the settlement with Avanir Pharmaceuticals on Thursday, four years after these whistleblowers alerted the federal government that they believed the company was paying kickbacks to doctors and illegally marketing its main drug, Nuedexta -- particularly in nursing homes. Each of these three whistleblowers will receive a portion of the millions Avanir has agreed to pay.
In addition to the settlement with Avanir, Justice Department officials announced they had indicted two doctors and two of the drugmaker's salespeople for their alleged involvement in a "kickback conspiracy."
The allegations resulting in Thursday's $116 million settlement -- which includes both civil damages and criminal penalties to federal and state governments -- mirrored those exposed by a 2017 CNN investigation into inappropriate and potentially fraudulent use of Nuedexta in nursing homes. Avanir said the company is "deeply committed to regulatory and legal compliance, integrity and ethical behavior" and that it had cooperated with the government investigation and "engaged in extensive remedial measures," which the government said included terminating or otherwise removing multiple employees.
The DOJ also said Avanir admits it paid a doctor "to induce him to not only maintain, but increase his prescription volume."
Nuedexta, which hit the market in 2011, is only approved by the federal government for a rare condition characterized by uncontrollable laughing and crying, known as pseudobulbar affect, or PBA.

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Yet whistleblowers alleged in lawsuits that from the drug's early years, the company illegally directed salespeople to market Nuedexta in nursing homes as an alternative to antipsychotic drugs specifically for "use in controlling the behavior of patients prone to disruptive outbursts." This came as the government attempted to crack down on the use of antipsychotics in restraining elderly dementia patients.
They also claimed that salespeople coached doctors on how to fill out prescriptions to ensure approval, forged physician signatures on paperwork for insurers and asked nursing home employees for names of patients to create lists of people physicians should target with Nuedexta.
"At least one Avanir (salesperson) went so far as to dress in scrubs, review patients' files at the nurses' station in nursing homes, and write the diagnosis for PBA in the medical files of patients," one lawsuit stated, adding that these tactics were allegedly praised by an executive on a national sales call.
Federal laws restrict the tactics pharmaceutical sales representatives can use to sell a medication. They can't give favors or payments in exchange for a doctor prescribing the drug. They can't have any contact with private patient records without the patient's consent. And they can't promote use of a drug off-label, in a way that hasn't been approved by the FDA.
Pharmaceutical companies are allowed to pay a doctor to promote a drug to colleagues and other medical professionals. It is illegal, however, for doctors to prescribe the drug in exchange for kickback payments from a manufacturer.
But the DOJ found that in order to boost prescriptions -- and in turn their own paychecks -- Avanir salespeople incentivized physicians by paying them for speaking events and meals. In one case, a salesperson allegedly offered to pay for a physician's firearms training. And in another, a doctor's staff Christmas parties were allegedly paid for by Avanir, according to one of the whistleblower suits.
Thursday's announcement resolved a government investigation involving the two separate whistleblower lawsuits. These complaints were originally filed under seal in 2015, and they were kept secret until the DOJ chose to publicly intervene in the cases with this settlement. Separately, the Los Angeles City Attorney's Office opened its own probe into the sal