Avanir Pharmaceuticals Will Pay Over $108 Million to Resolve Illegal Kickback Allegations Involving Its Drug Nuedexta, Three Whistleblowers Will Share $17 Million Award

Back in 2017, CNN published an investigation entitled, “The little red pill being pushed on the elderly.” The red pill was Nuedexta, which is used to treat a rare condition: pseudobulbar affect, also known as PBA. Now, its maker, Avanir Pharmaceuticals, has agreed to pay $108 million to resolve allegations that it offered illegal kickbacks to physicians to boost sales of the drug. 

Avanir Pharmaceuticals Will Pay Over $108 Million to Resolve Illegal Kickback Allegations Involving Its Drug Nuedexta, Three Whistleblowers Will Share $17 Million Award

Two False Claims Act complaints initiated the case against Avanir. The whistleblowers behind them will share a reward surpassing $17 million.

According to prosecutors, the doctors bribed by Avanir routinely prescribed the drug to people who didn’t need it. Medicare and other government healthcare programs were then billed for these prescriptions. Drugs.com estimates the price of Nuedexta at approximately $1,235 for a supply of 60 capsules.

Medicare spent about $225 million on Nuedexta in 2017. This represents a sevenfold increase when compared to data from five years earlier. The whistleblowers claimed that illegal kickbacks fueled this spectacular growth. In one of the most egregious examples of the practice, prosecutors found evidence that one doctor prescribed Nuedexta to 30 percent of the residents of a single nursing home. 

According to one of the two whistleblower complaints, filed by relator Kevin Manieri in March 2015, “Defendant Avanir is engaged in a drug kickback scheme with physicians around the United States, in which Avanir pays physicians speaking fees in exchange for the physicians' promises to prescribe Nuedexta,” and, “Defendant Dr. Raheja participated in this illegal kickback scheme by knowingly soliciting and accepting kickbacks from Avanir in return for prescribing Nuedexta to his patients.”

Dr. Raheja is named as a defendant in Manieri’s lawsuit. An Ohio-based neurologist, he is the “most prolific prescriber” of Nuedexta nationwide. Between March and September 2014, he wrote a staggering 1,287 prescriptions. Sometimes, during that period, he would write over 60 prescriptions in a single week. “Consistent with Avanir's policy of rewarding high-prescribing physicians with lucrative speaking fees,” the lawsuit states, “Dr. Raheja is Avanir's highest-paid speaker in the United States.” In fact, during tax year 2014, Avanir paid the specialist $56,250 in speaking fees. 

According to the same lawsuit, at one point, Manieri asked Frank Mazzucco, a regional manager at Avanir, why the company had to guarantee a large number of speaking engagements for Dr. Raheja, and Mazzucco replied, "He's our biggest prescriber and he likes to speak."

Frank Mazzucco
Frank Mazzucco

According to The Columbus Dispatch, Mazzucco is a graduate of Ohio State University’s College of Pharmacy. Since leaving Avanir, he has been hired by Neurocrine Biosciences, where he works as a regional specialty manager. A respected member of the community, Mazzucco was named Ohio Coach of the Year in 2018 for his work with a children’s soccer team. It is, as yet, unclear to what extent Mazzucco benefited from Avanir’s scheme.

The press has referred to Avanir’s alleged misconduct as “cashing in on dementia patients.” Nuedexta has only been approved by the FDA to treat PBA, which affects under one percent of Americans. PBA is a neurological condition that causes involuntary laughing or crying, but Avanir has been ‘cashing in’ by pushing it as a treatment for dementia and Alzheimer's.

“Since 2012, more than half of all Nuedexta pills have gone to long-term care facilities,” CNN reported. Yet Avanir’s own prescribing information states that the drug has been insufficiently tested on elderly patients, and the only study the company has carried out on this population revealed that Nuedexta dramatically increases the risk of falls in Alzheimer’s patients. Thus, one could say that prescriptions of Nuedexta for this type of patients is not only useless, but also potentially harmful.

Four Ohio residents have been indicted in the case, Dr. Raheja, of Hudson; Gregory Hayslette, of Aurora; the above mentioned Avanir executive, Frank Mazzucco, of Dublin; and Bhupinder Sawhny, of Gates Mills. 

On the other hand, the California-headquartered drugmaker has entered into a deferred prosecution agreement with the Northern District of Georgia. “The agreement specifically identifies the company’s substantial and ongoing cooperation with the investigation,” the DOJ said in a statement. 

Avanir has reportedly fired or allowed to resign several individuals who were allegedly involved in the scheme. If the misconduct should continue, Avanir could face exclusion from programs like Medicare and Medicaid. The government believes the deferred prosecution agreement is the best course of action to avoid negative consequences for American consumers, while “preserving the United States’ ability to prosecute. . . should material breaches occur.”

The U.S. Attorney for the Northern District of Ohio said in a press release that, “Doctors should prescribe medicine based on what is best for their patients, not on which drug company is paying for their travel and meals.”  

Mr. Manieri was the first whistleblower to file a complaint about Avanir’s misconduct relating to Nuedexta. Once a sales director with the company, Manieri was fired after less than a year of working there. According to the lawsuit, “After Relator Manieri objected to Avanir's use of speaking fees as inducements in his conversation with [Vice President of Sales] Michael McFadden, Mr. Manieri's relationship with Mr. McFadden quickly soured,” and, “Avanir terminated Relator Manieri's employment in retaliation for his opposition to Avanir's kickback scheme.”

Under the False Claims Act, whistleblowers like Manieri can file a lawsuit on behalf of the government and receive a share of any monetary recoveries. The relators must have original information about fraud. The vast majority of successful cases are filed with the aid of an experienced whistleblower attorney. Some of the top lawyers in the country take these types of cases on a contingency fee basis if they think the whistleblower’s claims have merit.

Manieri’s whistleblower lawsuit was followed by another one filed jointly by Duane Arnold and Mark Shipman, two Avanir sales managers in charge of promoting off-label uses of Nuedexta to nursing home doctors and allocating bribes. Because the evidence introduced by the second complaint was also instrumental in securing a settlement, the whistleblower award will be split between Manieri and the two other tipsters. 

Under the False Claims Act, whistleblowers are protected against retaliation by their employers. Manieri has also sued Avanir for retaliatory termination. While the recent settlement resolves the healthcare fraud case, Manieri’s second lawsuit is ongoing. 

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