Teva and IVAX: A Consulting Fee for a Prescription Switch

Teva and IVAX agreed to pay $27,681,698 in the clozapine settlement to resolve allegations that they paid an Illinois psychiatrist to prescribe generic clozapine, causing false claims to Medicare and Illinois Medicaid. The alleged bargain put a price on a doctor’s decision to switch his patients. For someone who approved the consulting contract, arranged the travel or saw the prescribing change, that connection is the story behind the settlement.

The Department of Justice announced the corporate settlement on March 11, 2014. Teva Pharmaceuticals USA and IVAX manufactured and distributed generic drugs, including clozapine. IVAX joined the Teva corporate group in 2006. The government alleged that payments begun by IVAX continued through Teva.

This pharmaceutical fraud case followed the manufacturer money into the prescribing decision and then into public-program claims. A separate civil case followed the psychiatrist who received the benefits.

What the Consulting Payment Was Supposed to Buy

The government alleged that IVAX offered a $50,000 one-year consulting agreement and other benefits in exchange for the psychiatrist switching his patients to generic clozapine. The arrangement allegedly began in August 2003. Consulting was the contract’s label. Moving patients to the company’s drug was the alleged bargain.

IVAX also allegedly paid for trips to Miami for the psychiatrist, his wife and several employees. The benefits reached beyond the person signing prescriptions. The Justice Department said the payments and other benefits continued for years, first from IVAX and later from Teva.

These are the business decisions behind pharmaceutical kickbacks: who receives the money, what the company wants in return and which prescriptions follow. In this case, the government put the switch itself inside the agreement. That gives a sales or practice insider something concrete to recognize, beyond an expense entry marked consulting or travel.

The Justice Department described clozapine as approved for treatment-resistant schizophrenia and generally considered a drug of last resort, particularly for elderly patients. Its potential side effects include a dangerous loss of white blood cells, seizures, heart-muscle inflammation and increased mortality in elderly patients.

The same announcement said the psychiatrist quickly became the country’s largest prescriber of generic clozapine and prescribed it to many elderly patients. The alleged bargain put the manufacturer’s sales interest inside a medical decision about a drug of last resort.

From a Prescription to a Government Claim

The government alleged that the payments produced thousands of false claims to Medicare Part D and Illinois Medicaid. The consulting payment allegedly bought influence at the prescribing stage. The resulting prescription then entered the system that pays for the drug.

In the pharmaceutical supply chain, the manufacturer, prescriber and pharmacy perform different jobs. A manufacturer can cause a false claim even when a pharmacy or another provider submits it. Teva and IVAX’s agreement describes that distinction directly: the government alleged that their payments caused claims for the psychiatrist’s clozapine prescriptions.

The government identified Illinois Medicaid alongside Part D, so the alleged prescribing arrangement reached both federal and state interests.

The government alleged that paying the psychiatrist to switch prescriptions violated the Anti-Kickback Statute. The False Claims Act case concerned the government claims those prescriptions generated. Here, the money to the doctor and the claim for the medicine were different transactions connected by the prescribing decision.

A manufacturer employee may understand why the company selected a physician for a payment. Someone in the practice or pharmacy may see the prescriptions that followed. We connect those views to the government-paid drug business at the center of the case.

What Teva and IVAX Agreed to Pay

The corporate settlement covered alleged payments and resulting clozapine claims from 2003 through 2009.

The agreement allocated $15,495,347 to the United States and $12,186,351 to Illinois.

Teva also agreed not to seek payment from patients or their families for the health care billings covered by the agreement.

The Prescriber’s Separate Civil Settlement

The psychiatrist separately agreed to pay $3.79 million to the United States and Illinois to resolve a civil lawsuit over clozapine kickbacks and resulting Medicare and Medicaid claims. The Department of Health and Human Services Office of Inspector General’s account of that civil settlement, dated February 13, 2015, described prescriptions for thousands of elderly and indigent patients in at least 30 Chicago-area nursing homes and other facilities.

The nursing-home setting helps explain how one prescriber’s decisions could shape healthcare for so many patients. The alleged deal joined a manufacturer’s sales interest to a physician’s decisions across facilities serving people who depended on that medical judgment.

What Evidence Is Needed to Prove Fraud?

For an alleged prescribing-payment scheme, the evidence connects what the manufacturer offered, what the recipient was expected to do and which government claims followed. In the Teva and IVAX case, the consulting arrangement, travel benefits and patient switch give those connections a concrete shape. Our work with pharmaceutical whistleblowers starts with what they know about that business purpose.

A parallel involving paid research and data agreements shows why the work’s label matters less than what changed in the practice. In a separate Amgen settlement over Xgeva, the government alleged that the company changed a survey program so payments went only to physicians prescribing Xgeva. A whistleblower’s complaint described a practice manager’s reported explanation of a data agreement:

The Amgen allegation concerned a payment per patient. The clozapine allegation concerned a consulting agreement conditioned on switching patients. Both put the commercial exchange where an insider could see it: the manufacturer paid, and prescribing business was the expected return.

That is why we examine the agreement alongside the work actually requested, the payment approvals, the travel arrangements and the prescribing decisions. Someone who knows why a payment was approved can explain a relationship that the invoice alone leaves out.

You Know Why the Payment Was Approved

If you saw a consulting fee or company-paid trip tied to a prescribing switch, tell our whistleblower experts what the company expected in return. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. We build the case with you, bring in pharmaceutical whistleblower lawyers who know physician-payment and government-claim cases, and stay beside you through the pursuit of a recovery.