The Washington Post reported on Dec. 27, 2012, that Victory Pharmaceuticals, headquartered in San Diego, was forced to pay $11.4 million to resolve Federal, civil and criminal liabilities related to kickbacks to doctors in return for prescribing their drugs. Victory is a privately held company, founded in 2003, and is focused on acquiring, developing and marketing products to treat pain and related conditions. As it turns out, part of the marketing strategy was to offer kickbacks to doctors in return for prescribing its products.

The kickbacks included tickets to professional and collegiate sporting events, tickets to concerts and plays, spa outings, golf and ski outings, dinners at expensive restaurants, giving a doctor money to help make a house payment, paying for a doctor’s staff’s outing to a strip club, including “lap dances” for the female staff and offering a doctor and his staff an all-expense paid trip to Las Vegas. A former sales representative for Victory, Chad Miller, blew the whistle on them and received $1.7 million for his efforts.

Miller was represented by Boston attorney Joseph M. Makalusky, who said the following:

“By bribing physicians with cash, concert tickets, tickets to sporting events, dinners and other inducements, Victory Pharma compromised what is supposed to be the physician’s independent and sound medical judgment when they prescribe drugs to their patients. The practice of providing these kickbacks, which puts a patient’s health secondary to profits, is a clear violation of the False Claims Act. I am proud that my client had the courage to step forward and put an end to this fraud, and I hope that this case and others like it [embolden] would-be whistle blowers to do the same.”

Principal Deputy Assistant Attorney General Stuart F. Delery, in the Justice Department’s Civil Division, said kickback schemes “undermine the integrity of medical decisions, subvert the health marketplace and waste taxpayer dollars.”

“We will continue to hold accountable those who refuse to play by the rules and provide illegal incentives to influence the decision making of health care providers,” Delery said.

Victory Pharmaceuticals is, or was, located at 11682 El Camino Real, Suite 250, in San Diego. The CEO is Matthew Heck; Executive Chairman, Jim W Newman; Senior Vice President of Trade Relations, Doug Baratta; Chief Compliance Officer and Vice President, Michael Hercz; Chief Accounting Officer, Dan Stokely.

Its products include Naprelan tablets for the treatment of rheumatoid arthritis, osteoarthritis, ankylosing spondylitis, tendinitis, bursitis and acute gout, as well as for the relief of mild to moderate pain and treatment of primary dysmenorrheal; and Xodol for the relief of moderate to moderately severe pain.

The Justice Department has made fraud and abuse a key area of focus under the Obama administration, collecting more than $4.9 billion in the fiscal year which ended Sept. 30. The Victory Pharma agreement comes on the heels of two high-dollar settlements. Last week, biotech giant Amgen agreed to pay $762 million over its marketing of the anemia drug Aranesp, and drug maker Sanofi US agreed to pay $109 million to resolve anti-kickback allegations relating to its marketing practices.

Victory Pharma is no longer in business after selling its nine marketed products in July 2011 to Shionogi, Inc., based in Osaka, Japan. Shionogi paid over $118 million for the products. After paying a $11.4 million fine, Victory Pharma’s principals have a nice pile  of cash left over. They can laugh all the way to the bank or all the way to Las Vegas. Maybe a few doctors are laughing too.

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John Lawrence

John Lawrence graduated from Georgia Tech, Stanford and University of California at San Diego. While at UCSD, he was one of the original writer/workers on the San Diego Free Press in the late 1960s. He founded the San Diego Jazz Society in 1984 which had grants from the San Diego Commission for Arts and Culture and presented both local and nationally known jazz artists. John received a Society of Professional Journalists, San Diego chapter, 2014 award. His website is Social Choice and Beyond which exemplifies his interest in Economic Democracy. His book is East West Synthesis. He also blogs at Will Blog For Food. He can be reached at j.c.lawrence@cox.net.

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