ISTA Pharmaceuticals Inc. Pleads Guilty to Health Care Fraud Kickback Charges

June 20, 2013 — It is a violation of the federal False Claims Act for a drug manufacturer to cause claims to be submitted to Medicare for drugs that have not been approved by the FDA for the purpose for which the pharmaceuticals were prescribed. Federally funded healthcare programs cannot afford to pay for medications that may not even be useful to patients, or worse, may actually harm them. To tackle the problem of off-label drug use and kickbacks in the Medicare arena, the U.S. Justice Department relies on whistleblower lawsuits filed under the federal False Claims Act. The qui tam provisions of the statute permit pharmaceutical company insiders who discover False Claims Act violations to bring suit against the pharmaceutical companies and keep a portion of any recovery.

Maker of Xibrom to Pay $15 Million to Resolve False Claims Act Liability

June 20, 2013 — ISTA Pharmaceuticals, Inc. has pleaded guilty for introducing its misbranded Xibrom into interstate commerce and for paying illegal remuneration in contravention of the Federal Anti-Kickback Statute. To resolve the criminal charges, ISTA will pay a total of $18.5 million.

Xibrom has been approved by the FDA as an ophthalmic drug for treating pain and inflammation after cataract surgery. Yet from 2005 to 2010, the Justice Department alleges, ISTA employees promoted the drug to physicians for unapproved new uses, such as the prevention and treatment of cystoid macular edema or for use after glaucoma and Lasik surgeries. Xibrom was promoted for the unapproved uses at medical education programs and ISTA employees provided post-operative instruction sheets for such uses to physicians. To hide the off-label marketing scam, ISTA management instructed employees not to leave certain incriminating materials in physician’s offices.

ISTA has also pleaded guilty to paying kickbacks to doctors as an inducement for the physicians’ prescription of Xibrom for the off-label uses. The kickbacks allegedly took the form of free products as well as monetary payments, entertainment, and paid speaker or consulting arrangements.

ISTA has also consented to pay $15 million to resolve state and federal civil claims that the company’s marketing of Xibrom violated the False Claims Act. The federal False Claims Act allegations were first made in two whistleblower lawsuits filed under the qui tam provisions of the Act in federal court in New York. The whistleblower Keith Schenker will keep around $2.5 million from the share of the settlement apportioned to the federal government.

In addition to the monetary penalties, Bausch+Lomb Inc., ISTA’s parent company, has consented to maintain a Compliance and Ethics Program to prevent future violations.

False Claims Act Lawsuits Frequently Brought by Health Care Insiders

When a drug maker like ISTA has multiple employees engaged in an illegal kickback scam or in causing Medicare to be billed for drugs marketed for off-label uses, the False Claims Act violations are bound to be discovered. Still, it can be very difficult for courageous informants to collaborate with the government when an employer is engaged in Medicare fraud. Whistleblowers who notify the U.S. Department of Justice about health care fraud should learn their own legal rights from the start. With law offices around the country, Waters & Kraus provides conscientious informants the experienced legal representation they need. Contact us by email or call our whistleblower lawyers at 855.784.0268 to learn about our qui tam practice.

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