Amgen Execs Take The 5th Over Alleged Kickbacks
8 CommentsBy Ed Silverman // March 3rd, 2011 // 7:03 am
Five former Amgen execs have ‘taken the Fifth’ in depositions that were conducted as part of a False Claims Act lawsuit scheduled to go to trial in federal court in Boston later this year. And the former Amgen sales rep and product manager who brought the lawsuit is fighting to have the depositions filed in court and made public.
At issue are allegations that Amgen provided free ‘overfills’ of its Aranesp anemia medication and encouraged doctors to bill Medicare and Medicaid for the extra amounts. The lawsuit, which was filed by Kassie Westmoreland, also charges the biotech offered kickbacks to doctors in the form of fictitious consulting arrangements and weekend getaways in order to steal market share from Johnson & Johnson, which sells the rival Procrit treatment (read the lawsuit).
But the former Amgen execs are apparently worried their testimony may get them in hot water. “The former employees of Amgen – at every level of the corporation from sales representative to senior management – were unwilling to answer even basic questions about their tenure with Amgen for fear of exposing themselves to criminal prosecution,” according to a memo filed by Westmoreland’s attorney (read the memo). Also taking the Fifth Amendment was an office manager of a medical provider who purchased Aranesp from Amgen.
In her lawsuit, Westmoreland describes reports showing the additional profits Amgen - and doctors - could make if doctors billed Medicaid and Medicare for overfills. In fact, she cites internal documents concluding that Aranesp was less profitable for doctors unless Aranesp overfills were taken into account (see here), and that spreadsheets were used to convince doctors of the favorable ‘economics.’
Basically, the vials that Amgen would sell to doctors contained more Aranespt than was needed for a dose, which meant the overfill could be used for other patients, but Medicare would be billed for a regular dose and the overfill. This amounted to additional reimbursement to the doctors who followed Amgen suggestions. However, the lawsuit notes the practice can also lead to overmedicating patients, which can lead to strokes.
Aranesp is an important drug for Amgen. Between 2001 and 2008, the med generated more than $11 billion in revenue, with approximately $6 billion coming from federal and state health care programs such as Medicare and Medicaid. In 2005, spending for epoetin treatments - which include Aranesp, Procrit and Amgen’s Epogen - was the single largest Medicare drug expenditure, reaching $1.75 billion, and is the second-largest source of income for dialysis facilities, according to the lawsuit.
So far, 15 states have joined the lawsuit, although the federal government has so far not decided whether to take the same action.
EDITOR’S NOTE: This item was posted on Wednesday night, March 2, but we have placed it higher up on the page in the event that some readers would not have noticed it this morning.
Rich Meyer
I guess what I want to know is who spearheaded this fraud ? My guess is that is originated in the sales force because good manufacturing guidelines call for overfilling vials to allow for liquids to evaporate. I cant see anyone at manufacturing or marketing being party to this. Once again the sales force trying to exceed targets but where the hell were the safeguards ?
Steve Knows
I read the entire article and find it is highly doubtful that Amgen would shut down its filling run, then start up with (special additional) fills just to give selective kickbacks. It’s ridiculous, and a waste of legal expenses to respond to such unbelievable drivel. Imaginations run wild.
Insider
I have no problem believing that the managers marketed the drug that way to seek an advantage over J$J.
Steve Knows
Amgen did not benefit from this alleged and trumped up claim as sales since 2008 have declined along with revenues. I criticize the company for matters I think should be otherwise but, this is not vintage Amgen.
Insider
That does not mean that they did not do it. It just means they were probably more desperate. At Pfizer, I did not see as much illegal activity if the team was making its numbers on a drug but if the forcasts were way to high then there was all kinds of illegal activity to get in the ball game. THere is much more pressure when your not making your forecast then when you are. It is interesting but the managers not making their numbers was not the same problem as the rep not making his numbers.
Pharmarep
This is always created through marketing and management in this industry. Those in the pharma industry are aware of similiar types of tactics, just in slightly different variations to increase sales of a product. Common sense about the execs taking the 5th should be a big clue in. Right now, there are several different suits by states against several pharma companies for product fraud (pricing and reimbursement issues). What is more interesting to me is how can anyone be so naive to think that this type of fraud is not capable by corporate execs in the pharma business when there has already been numerous fraud and pricing fixing claims/and/or settlements with the govt. in the past ten years?
Steve Knows
I refuse to believe that Amgen would stop production (costly) just to fill isolated additional amounts of the product.
in and out
I wonder if this isn’t a case where y’all could be right at once? I used to be a manufacturing engineer (about 3 careers ago) and agree that changing a production schedule to deliberately “over-overfill” a run for selective distribution probably wouldn’t happen (although, yeah, it’s theoretically possible).
More likely, someone (in sales? in marketing?) noticed that there was a consistent 10-15% overfilling (maybe more? maybe it was variable, up to 25% sometimes?) and figured out that this “standard” product offered the opportunity of doctors to do well by exploiting it. Amgen did well (or at least better than they would have) by getting doctors to notice this little opportunity for a petty corruption, causing them (the doctors) to prefer the Amgen product.
If it was all innocence, even if the actual overfilling was “normal”, I don’t think you’d have so many people taking the Fifth. Surely someone would be saying “Yeah, we always overfilled to account for shrinkage / evaporation . . . what of it?”