Kentucky AG announces $12 million settlement over illegal kickbacks

FRANKFORT, Ky. (February 12, 2013) –Attorney General Jack Conway announced that Kentucky has joined with other states and the federal government in reaching a more than $12 million settlement with Victory Pharma, Inc. (VPI) to resolve allegations of an illegal kickback scheme. VPI paid the states and federal government $12.2 million in civil damages to compensate Medicaid, Medicare and various federal healthcare programs for harm suffered as a result of its conduct.

The settlement resolves allegations that San Diego, California based VPI paid unlawful kickbacks to health care professionals to induce them to prescribe four of its drugs, Naprelan (osteoarthritis pain), Xodol (narcotic pain killer), Fexmid (muscle relaxant) and Dolgic (migraine headaches).

“Drug companies that engage in illegal marketing tactics to sell their products will be held accountable,” General Conway said. “Illegal kickback schemes waste taxpayer money, undermine the integrity of medical decisions and put the public’s health at risk.”

The states and federal government allege that from January 1, 2007 to December 31, 2009, VPI sales representatives made payments, in cash and in-kind to persuade physicians to prescribe the four drugs in question. The illegal kickbacks included direct cash payments to doctors, cash payments disguised as preceptorships or speaker fees, meals, gifts, entertainment, event tickets, recreational activities, and other valuable goods and services. The resulting prescriptions were paid for or reimbursed by the Kentucky Medicaid program, as well as other state Medicaid programs and government health plans.

The Kentucky Medicaid program will receive a total of $426,843 from the VPI settlement, of which it will retain approximately $120,000 after reimbursing the federal government for its share of the settlement.

Since Attorney General Conway took office in January 2008, his Office of Medicaid Fraud and Abuse Control has recovered or been awarded more than $292 million dollars for the state and federal Medicaid programs. These cases range from lawsuits and settlements against pharmaceutical companies to cases against individual providers.

The Attorney General’s Tip Line for reporting allegations of Medicaid fraud is 1-877-228-7384.

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