Government Settles VSG Qui Tam Kickback Case with Accredo Pharmacy for $60 million

Accredo resolves for $60 million VS&G client qui tam claims alleging pharmacy received rebates and patient referrals in exchange for drug recommendations

On May 1, 2015, the specialty pharmacy chain Accredo Health Group, Inc. resolved for $60 million qui tam claims brought by VS&G client David Kester in a False Claims Act lawsuitthat also named as a defendant the Swiss drug manufacturer, Novartis Pharmaceuticals Corporation.  Mr. Kester had alleged that Accredo and Novartis participated in a kickback scheme involving the iron-chelating drug Exjade, an expensive, specialty drug that costs government health programs many thousands of dollars per month to cover just a single prescription.

In a statement to the Court, the U.S. Attorney praised the work performed by Mr. Kester’s counsel in developing evidence relating to the claims against Accredo: “[Mr. Kester’s counsel’s] energetic discovery efforts yielded new and significant information concerning Novartis’s relationship with Accredo.”

Accredo’s decision to resolve the claims followed upon Mr. Kester’s litigation of the claims against the pharmacy chain on behalf of the federal government and 28 state governments. In January 2014, after the United States and these states declined to join in Mr. Kester’s claims against Accredo, Mr. Kester’s counsel proceeded with the lawsuit, surviving several motions to dismiss and many months of discovery.    In the same action, the United States and 11 states intervened in and proceeded to litigate  claims against Novartis based on the manufacturer’s Exjade transactions with the pharmacy chain Bioscrip.

In a statement to the public announcing the settlement, U.S. Attorney for the Southern District of New York, Preet Bharara, said: “Novartis used Accredo to promote refills under the guise of purported ‘counseling’ and ‘education,’ and in doing so, Novartis caused patients to receive one-sided advice that did not discuss Exjade’s serious, potentially life-threatening, side effects.”

New York Attorney General Eric Schneiderman said: “Patients have a right to unbiased information from their pharmacy about their medications… Drug companies cannot pay pharmacies to promote drugs directly to patients.”

The settlement with Accredo will return $45 million to the federal government, and an additional $15 million to the states.  The pharmacy Bioscrip, Inc. earlier paid $15 million to settle Mr. Kester’s claims in this lawsuit.  The False Claims Act provides that whistleblowers are entitled to receive between 15% and 30% of the Government’s recovery, depending upon their contribution to the outcome of the case.

Read more about the whistleblower case.

Read the settlement order.

Read the whistleblower complaint.

Read the U.S. Attorney’s Press Release.

Read the NY Attorney General’s Press Release.