One Way, Allegedly, to Battle Generic Versions of Drugs: A Psychiatrist, Kickbacks & Antipsychotics
Once again, Michael Reinstein has made news. The Chicago psychiatrist allegedly received illegal kickbacks from drugmakers and submitted at least 140,000 false claims to Medicare and Medicaid for antipsychotic drugs he prescribed for thousands of mentally ill patients in nursing homes, according to a lawsuit filed late last week by the US Department of Justice.
The feds charge that Reinstein accepted lucrative payments – in the form of consulting and speaking deals, and lavish travel reimbursement – from Novartis (NVS) and Teva Pharmaceuticals in exchange for prescribing their antipsychotic pills. Novartis sold Clozaril and Teva (TEVA), through its purchase of Ivax, sold the generic version called clozapine. And the feds say that Reinstein delivered – in a big way.
For instance, after the Novartis patent for Clozaril expired in 1998, Reinstein resisted efforts by pharmacies and other drugmakers to switch his patients to the lower-cost generic and he continued to be the largest Clozaril prescriber to Medicaid recipients in the US, according to the lawsuit (you can read more in this deposition). He later switched, thanks to incentives from Ivax and Teva.
A study done by the US Department of Health and Human Services found that, in 2007, clozapine was prescribed to less than two percent of nursing home residents for whom claims had been submitted to Medicare for an atypical antipsychotic. During the period in which Reinstein was soliciting and accepting kickbacks to prescribe clozapine, Reinstein had more than 50 percent of his patients on clozapine, according to the lawsuit (read here).
Such arrangements have been widely disclosed over the past several years as the feds have attempted to crack down on off-label prescribing and fraudulent Medicare and Medicaid claims that were subsequently filed by physicians. But this civil lawsuit marks one of the rare instances in which the feds have gone after a doctor for violating the False Claims Act.
Why? As we wrote last year, the line of reasoning is simply that individual doctors – or pharmacists, for that matter – are generally not worth the effort in terms of needed resources and potential returns for the feds. However, there have been various efforts in recent years to persuade the feds to do otherwise.
For instance, one attorney last year waged a court battle in hopes of reducing off-label prescriptions of antipsychotics to children who are on Medicaid. The issue has been contentious for several years, especially before several drugmakers won FDA approval to market their antipsychotics to increasingly younger children (see Pharma news).
To read the remainder of this article, go to Pharmalot.
Ed Silverman is the editor of Pharmalot and a contributor to YCharts, which includes the just-released YCharts Pro Platinum for professional investors.
Read more articles about: Company Analysis
Timeless thoughts for serious business minds
- pharma stocks
- tech stocks
- stocks that look cheap
- money managers
- stocks that look pricey
- retail stocks
- growth stocks
- earnings season
- dividend growth
- energy stocks
- bank stocks
- short sellers
- warren buffett
- entertainment stocks
- value investing
- executive compensation
- federal reserve
- fast food stocks
- overall market
- stock screener
- cyclical stocks
- industrial stocks