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Morris County pharmaceutical company agrees to pay $3.5M to resolve allegations of violating false claims act

NEWARK, NJ – Pacira Pharmaceuticals Inc., which is headquartered in Parsippany, will pay $3.5 million to resolve allegations that it paid kickbacks to doctors in the form of bogus research grants to induce them to prescribe its analgesic Exparel. The allegations arose from a whistleblower suit filed under the False Claims Act, attorney for the United States Rachael A. Honig announced Tuesday.

“Pacira tried to accelerate sales of its Exparel product through an illegal kickback scheme,” Honig said. “Pharmaceutical companies may not entice doctors to use their products by offering research grants in return for sales. Illegal inducements can distort medical decision-making, lead to the use of overpriced drugs, and drive up health care costs for everyone.”

“The payment of kickbacks or bribes in exchange for phony research and other grants, robs the government and every American,” FBI-Newark Acting Special Agent in Charge Joe Denahan said. “Today’s agreement by Pacira Pharmaceuticals Inc., to pay $3.5 million, should send a strong message to anyone thinking about participating in this type of illegal activity.  The FBI remains committed to combating these types of schemes and bringing these perpetrators to justice.”

“Offering phony research grants in order to increase sales and fatten the bottom line is illegal and can be detrimental to the medical decision-making process,” Scott J. Lampert, Special Agent in Charge of the Office of Inspector General for the U.S. Department of Health and Human Services, said. “We will continue to work with our law enforcement partners to safeguard our government health care programs and the taxpayers picking up the bill.”

According to documents filed in this case and the contentions of the United States contained in the settlement agreement, from Dec. 1, 2012, through April 30, 2015, Pacira paid disguised kickbacks in the form of research and other grants to healthcare providers and institutions. Pacira intended these payments to induce sales of its newly-launched local analgesic, Exparel, to the targeted physicians and their respective hospitals. The research grants in question were typically initiated by Pacira sales representatives or marketing executives, who discussed internally their sales goals in connection with the grant. Pacira also required that Exparel be placed on formulary at the physician’s institution before awarding any research grant.

After awarding the grant money, Pacira expressed little interest in the proposed research. Pacira did not contractually require that the grant recipient adhere to the proposed research topic or achieve certain milestones before payment. In many cases, Pacira did not follow up with the grant recipient to ensure that the work was being performed, and in some cases, the grant recipient did no work at all. Pacira did not document why it needed the research or the fair market value of the proposal. Finally, Pacira executives coached grant recipients and other employees on how to avoid internal scrutiny of the grant payments.

Medicare and Medicaid do not pay for claims that include products tainted by illegal kickbacks. Pacira caused the submission of false claims by using these research grants to induce sales of Exparel, which it knew would be used in procedures reimbursed by Medicare and Medicaid.

The allegations were raised in a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act, which allows private citizens with knowledge of fraud to bring civil actions on behalf of the Government and to share in any recovery. As part of Tuesday’s resolution, the whistleblower—a pharmacist who brought the misconduct to the government’s attention—will receive approximately $520,000 of the recovery from the federal share of the settlement, plus approximately $118,000 from the state share of the settlement.

Jay Edwards

Born and raised in Northwest NJ, Jay has a degree in Communications and has had a life-long interest in local radio and various styles of music. Jay has held numerous jobs over the years such as stunt car driver, bartender, voice-over artist, traffic reporter (award winning), NY Yankee maintenance crewmember and peanut farm worker. His hobbies include mountain climbing, snowmobiling, cooking, performing stand-up comedy and he is an avid squirrel watcher. Jay has been a guest on America’s Morning Headquarters,program on The Weather Channel, and was interviewed by Sam Champion.

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