Misconduct at Acquired Pharmaceutical Companies: The New Owner and the Old Conduct

After a pharmaceutical acquisition, an inherited fraud settlement can name the new owner for conduct at the business it bought. The drug, the sales program and the people who knew how it worked may be familiar to you even when the name in the settlement headline is different.

A pharmaceutical acquisition can transfer a commercial position built around a drug’s approval, approved uses and future sales. It can also transfer the sales force. That makes the handover matter to someone who handled speaker payments, hospital contracts or government price reporting: the business has a history on both sides of the purchase.

The Company Name Belongs Beside the Conduct Date

The cases show different relationships between ownership and conduct. Pfizer agreed to pay on behalf of Biohaven over pre-acquisition speaker programs. Eisai resolved allegations about marketing after it bought Zonegran from Elan. Mallinckrodt’s Acthar cases reach both earlier Questcor activity and later rebate reporting.

Even a carefully compiled industry total can put the later parent’s name beside an earlier company’s conduct. Public Citizen’s 2018 report, Twenty-Seven Years of Pharmaceutical Industry Criminal and Civil Penalties: 1991 Through 2017, identified repeated settlements involving major manufacturers. Its method for assigning settlements to companies explains something a company ranking alone cannot:

That method groups settlements under an owner at resolution. To understand the underlying conduct, the reader still needs the operating company and the product’s history. Biohaven and Wyeth both appear in settlements involving Pfizer, but the alleged schemes involved different products and different ways of taking money from government health programs.

Biohaven to Pfizer, With Nurtec’s Speaker Programs Stopped at Acquisition

Pfizer agreed to pay $59,746,277 on behalf of its wholly owned subsidiary Biohaven in the January 24, 2025 settlement. The allegations concerned Biohaven’s payments to induce prescriptions of Nurtec ODT, a migraine medication, before Pfizer bought the company.

The settlement covered alleged payments from March 1, 2020, through September 30, 2022. The government said Pfizer acquired Biohaven in October 2022 and terminated the Nurtec speaker programs. The settlement still reached the payments made before the purchase.

According to the Justice Department, Biohaven selected healthcare providers for paid speaking opportunities to encourage their prescribing. The alleged benefits included speaker fees and meals at high-end restaurants. Some prescribers repeatedly attended programs on the same subject without receiving an educational benefit. Other attendees included speakers’ spouses, relatives, friends and colleagues from their own practices.

A former Biohaven sales representative brought the whistleblower case. Her complaint described the payment decision even more directly:

The alleged obligation to pay survived the absence of the audience. For someone who arranged these events, the attendance record and the speaker payment explain more than the program’s educational label.

The announcement provided approximately $8.4 million for the whistleblower as her share of the federal recovery. Pfizer’s name appears on the settlement, but the sales representative’s knowledge came from inside Biohaven.

Elan to Eisai, With Zonegran Marketing Continuing After the Sale

Eisai bought Zonegran and its sales force from Elan in April 2004. The government’s December 15, 2010 announcement described separate civil settlements with the seller and the buyer over promotion of the epilepsy drug.

Elan agreed to pay $102,890,517 to resolve civil allegations that its promotion caused government health care programs to receive claims for uses they did not cover. Eisai separately agreed to pay $11 million over allegations that its promotion caused the same kind of false claims.

The government alleged that some off-label marketing continued after Eisai retrained the sales force and took steps to stop it. Eisai also benefited from Elan’s earlier marketing, according to the government.

For an employee who stayed with the product, the relevant history includes what changed in the training and what continued in sales calls. A revised presentation and the instructions actually given to the sales force can tell different stories.

A physician brought the whistleblower case resolved by both civil settlements. The people receiving the sales pitch may recognize continuity across a purchase as clearly as the people delivering it.

Questcor to Mallinckrodt, With Different Acthar Schemes in Different Settlements

Mallinckrodt acquired Questcor on August 14, 2014. The government’s complaint traces the business through the purchase: Questcor survived as a subsidiary, continued marketing Acthar and later became Mallinckrodt ARD.

Physician Entertainment Before the Acquisition

The settlement announced September 4, 2019 required Mallinckrodt to pay $15.4 million over alleged dinners and entertainment for physicians to induce Acthar prescriptions during 2009 through 2013. The alleged conduct preceded the acquisition. Whistleblowers brought the cases, and the government joined them.

This settlement concerned benefits allegedly given to physicians, a different transaction from the price reporting and patient copays addressed in the later Acthar resolution.

A Rebate Baseline That Crossed the Ownership Change

The March 7, 2022 settlement totaled $260 million. It resolved Medicaid rebate allegations and a separate allegation involving foundation-funded patient copays.

The rebate allegation turned on the starting price used to measure later price increases. Medicaid’s inflation rebate compares a drug’s reported average manufacturer price with its earlier baseline adjusted for inflation. Moving that baseline forward can remove earlier price increases from the comparison.

The government alleged that Questcor and then Mallinckrodt calculated rebates as though Acthar were a new drug first marketed in 2013. That treatment left earlier increases out of the inflation rebate. Mallinckrodt admitted in the settlement that Acthar had been approved and marketed before 1990 and agreed to correct its base-date average manufacturer price.

The whistleblower’s amended complaint described what allegedly happened inside finance after the Centers for Medicare and Medicaid Services demanded a correction:

In that account, management’s answer to the rebate bill was to restrict who could discuss it. The whistleblower worked in internal controls, gross-to-net accounting and government reporting, and described this decision after the purchase.

The copay allegations followed another flow of money. The government alleged that the company used a foundation to cover Medicare patients’ Acthar copays, allowing the manufacturer to maintain a high price while removing the patient’s immediate cost. The rebate calculation concerned money owed back to Medicaid. The foundation payments concerned purchases billed to Medicare.

Wyeth to Pfizer, With Protonix Discounts Hidden From Medicaid

Wyeth’s alleged Protonix rebate underpayments ran from 2001 through 2006. Pfizer acquired Wyeth in 2009. On April 27, 2016, Wyeth and Pfizer agreed to pay $784.6 million to resolve the allegations. The government alleged that Medicaid had lost hundreds of millions of dollars in rebates.

The government alleged that Wyeth bundled deep hospital discounts on Protonix Oral and Protonix IV but hid those discounts from Medicaid’s best-price reporting. The hospital price was part of a larger commercial strategy. According to the government, patients discharged on the oral drug were likely to keep taking it, with payers including Medicaid paying nearly full price afterward.

The discounted hospital sale helped establish the outpatient business. Medicaid then allegedly lost the rebates that should have reflected the hospital discounts. That connection between a contract signed at the hospital and later government spending is what makes the pricing records matter.

The settlement terms assigned Wyeth the payment obligations to the federal government and state Medicaid programs. They also provided a combined whistleblower share of about $98.1 million from the federal and state recoveries for the two people who brought the cases.

Actelion After Johnson & Johnson’s Acquisition

Actelion agreed to pay $360 million in the December 6, 2018 copay-foundation settlement. Johnson & Johnson had acquired it on June 16, 2017, after the alleged conduct.

The allegations concerned pulmonary arterial hypertension drugs, including Tracleer. In 2014 and 2015, according to the government, Actelion obtained drug-specific information showing how much a foundation spent on patients taking its products and how much it expected to spend. Actelion allegedly used those figures to budget contributions sufficient for its own patients’ copays, while leaving other manufacturers’ patients out of that calculation.

The government also alleged that Actelion excluded Medicare patients from its free-drug program and sent them to the foundation instead. The foundation covered the copay, and Medicare received the claim for the remaining cost. Someone handling the assistance data or donation budget could see the connection between money described as charity and revenue from the company’s own drugs.

What Evidence Is Needed to Prove Fraud?

Our whistleblower experts work with you to connect what you know about the earlier business to the decisions made after the sale. The cases show why that work matters: a speaker payment beside an attendance record, a hospital discount beside a reported best price, or an old rebate baseline still in use after an acquisition.

The handover adds a further question about what happened inside the business. The government said Pfizer ended Biohaven’s programs and alleged that some Zonegran marketing continued after Eisai retrained the sales force. The Acthar whistleblower described a calculation and a decision about who could discuss it. Employees in sales, finance and government reporting can explain those changes from the work they actually did.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. If your knowledge connects a predecessor’s practices to the business that bought it, our whistleblower experts can assess that history with you and build the case around the transactions that matter.

You Know the Business Before and After the Deal

If you recognize the old sales program, the inherited price report or the decision that kept it running, speak with our pharmaceutical fraud whistleblower experts. We develop the case with you and bring in pharmaceutical fraud whistleblower lawyers who understand government pricing and prescribing incentives. We stay beside you as the case connects the earlier business to the decisions made under its new owner.