August 20, 2018

AstraZeneca Settles Texas Medicaid Fraud Suits For $110M

By RJ Vogt
Law360 (August 7, 2018, 8:41 PM EDT) — Pharmaceutical giant AstraZeneca LP<https://www.law360.com/companies/astrazeneca> has agreed to pay $110 million to the state of Texas to settle lawsuits accusing the company of falsely marketing its drugs Seroquel and Crestor in violation of the Texas Medicaid Fraud Prevention Act, according to a Tuesday announcement by the state attorney general.

Texas Attorney General Ken Paxton said the company was accused of using misleading marketing schemes at a time when it was already under strict obligations of a 2010 federal “corporate integrity agreement” resulting from prior allegations of Medicaid fraud.

That federal agreement prohibited AstraZeneca from promoting off-label uses of its antipsychotic medication Seroquel and its cholesterol-lowering drug Crestor, but Texas alleged “the company continued to do so anyway” by promoting Seroquel to Texas Medicaid providers “who primarily treated children and adolescents when those drugs were not approved as safe and effective for use in that vulnerable population.”

“Texas leads the country in protecting its Medicaid system from pharmaceutical fraud,” Paxton said in a statement. “The allegations that led to this settlement are especially disturbing because the well-being of children and the integrity of the state hospital system were jeopardized. The cooperation and support of the Texas Health and Human Services Commission<https://www.law360.com/agencies/texas-health-and-human-services-commission> was essential in achieving this outstanding outcome for Texans.”

The state attorney general’s office said AstraZeneca carried out a similar nationwide marketing fraud scheme involving Crestor, alleging the company “executed a plan of deception targeted directly at Texas Medicaid.” Crestor is a statin, a type of drug that reduces fat levels in the blood, and Texas claims AstraZeneca tried “to expand the use of the statin beyond what the science supported, while downplaying a significant risk of diabetes in certain patients.”

According to the settlement agreements signed July 27, AstraZeneca agreed to pay $90 million to settle claims related to Seroquel and $20 million to settle claims related to Crestor.

In a statement Tuesday, an AstraZeneca spokesperson told Law360 that the company makes no concessions or admissions of fault in the settlement agreements.

“While AstraZeneca denies the allegations, it is in the best interests of the company to resolve these matters and to move forward with our business of discovering and developing important, life-changing medicines — while avoiding the delay, uncertainty, and expense of protracted litigation,” the spokesperson said.

The settlements include attorneys’ fees and costs for both the state and the relators, former AstraZeneca employees who provided information to the attorney general’s office under the whistleblower provisions of the Texas Medicaid Fraud Prevention Act.

James J. Pepper of The Pepper Law Firm LLC, who represented relator Allison Zayas in the case regarding Seroquel, said in a statement that “today marks the successful conclusion” of her eight-year battle to hold AstraZeneca accountable for its conduct.

“She showed tremendous courage throughout the entire litigation. Eight years is a tremendously long time for a resolution of a case — be it by trial or settlement — and she is pleased that this chapter in her life is now over,” Pepper added.

Joel Androphy of Berg & Androphy<https://www.law360.com/firms/berg-androphy>, who represented relator Rosemarie De Souza in the case regarding Crestor, told Law360 on Tuesday that the settlements were a “long overdue resolution thanks to the efforts of Texas AG.” His colleague Sarah M. Frazier called it a “landmark settlement.”

Baron & Budd PC’s Scott Simmer<https://www.law360.com/firms/baron-budd>, who represented relators in both cases, said in a statement that “it is simply wrong for a drug maker to misrepresent its products to state officials as well as to doctors, putting lives at risk and wasting taxpayer resources.”

Representatives for the state of Texas did not immediately respond to a request for additional comment.

Relator Allison Zayas is represented by Frederick P. Santarelli of Elliott Greenleaf PC<https://www.law360.com/firms/elliott-greenleaf>, James J. Pepper of The Pepper Law Firm LLC, and Brian P. Kenney and Brian McCafferty of Kenney & McCafferty PC<https://www.law360.com/firms/kenney-mccafferty>.

Relators Tracy Miksell-Branch, Layne D. Foote and Mark Lorden are represented by Alan M. Freeman Blank Rome LLP<https://www.law360.com/firms/blank-rome>, and Scott Simmer of Baron & Budd PC.

Relator Rosemarie De Souza is represented by Joel Androphy and Sarah Frazier of Berg & Androphy.

Relator Kenneth McDonough MD is represented by Teresa N. Cavenagh of Duane Morris LLP<https://www.law360.com/firms/duane-morris>.

Texas is represented by Raymond C. Winter of the state attorney general’s office.

AstraZeneca is represented by its senior legal counsel Cara Kearney, J. Gordon Cooney, Jr. and John C. Dodds Morgan of Lewis & Bockius LLP, and Stephen E. McConnico and Kennon L. Wooten of Scott Douglass & McConnico LLP<https://www.law360.com/firms/scott-douglass>.

The underlying lawsuits are State of Texas ex rel. Allison Zayas and Tracy Miksell-Branch v. AstraZeneca LP et al., number D-1-GN-13-003530, and State of Texas ex rel. Layne D. Foote, Mark T. Lorden, Rosemarie De Souza and Kenneth McDonough, M.D. v. AstraZeneca LP et al., number D-1-GV-13-000812, in the 353rd Judicial District Court of Travis County, Texas.

–Editing by Breda Lund.