AstraZeneca Executives, Sales Reps Sentenced to Prison For Medicare Fraud Scheme
Updated
A multi-year Chinese investigation into AstraZeneca Medicare fraud has implicated more than 100 employees, including Leon Wang, the former international chief who was replaced earlier this month. Wang was detained a month ago by Chinese authorities. He is cooperating with the investigation and has obtained legal counsel, but minimal information has been provided to the public.
The fraud case involves the company’s drug Tagrisso, approved in 2017 as a second-line defense for non-small cell lung cancer. China included Tagrisso in its basic medical insurance catalog in 2018, significantly reducing patient costs. However, in order to qualify for the drug through China’s Medicare-style program, patients need to show a genetic test positive for T790M. This would validate that the patient has taken the first-line treatment and is resistant to the drug.
Court documents show that in 2019, two sales representatives advocated for a partnership with Genowise Corp, which could provide positive T790 tests to get more patients qualified for Tagrisso under the Chinese healthcare program. Chen Bin was the sales director for oncology drugs in the East China region and encouraged sales staff to send samples to “partnered genetic testing institutions” to “convert” the samples to test positive for T790M.
Several sales representatives and regional managers have admitted to altering reports by taking positive test results and replacing the names on the reports. Tagrisso was approved as a first-line treatment in 2021, so this stopped the fraud from occurring. However, those involved in the fraudulent scheme from 2019-2021 are being investigated by Chinese authorities.
The investigations began in July 2021 when the Healthcare Security Bureau of Shenzhen looked into reports of insurance fraud. In September, many sales representatives were detained. Later that year, AstraZeneca promised Chinese regulators that they would make changes. Several senior managers resigned or moved to different departments within the company, including Eva Yin, who reported directly to Wang.
Zuo Yingquan, a supervisor of oncology drug sales in five Chinese provinces, was detained in January 2022. In June 2022, more than 10 sales reps were arrested for suspected fraud. In August 2023, Zuo Yingquan was sentenced to 11.5 years in prison. 13 sales team members also received sentences of up to four years for their role in the fraudulent scheme.
Diao Liuyin, a Tagrisso sales supervisor in Fuzhou, was also sentenced to 11.5 years in prison in June 2024. The investigation expanded to genetic testing laboratories that partnered with AstraZeneca. Four shareholders and senior executives at Rightongene Biotechnology Co. Ltd. were arrested in July.
Court records reveal that sales reps felt pressure to reach ambitious goals set by the company, which was the key motivating factor in committing fraud. Diao’s family wrote a letter arguing that the company should face liability for the fraudulent activity because their policies encouraged the behavior. Also, the letter said the company received the most benefit from the fraud, but employees are bearing the full weight of the consequences.
AstraZeneca has been held liable for fraud and misconduct in the United States multiple times over the last 21 years. In 2003, the company paid $355 million for illegal marketing of cancer drug Zoladex, which resulted in a loss of $40 million for Medicare and Medicaid.
In 2010, AstraZeneca paid $520 million for marketing off-label uses of Seroquel, which was only approved for “manifestations of psychotic disorders.” According to the DOJ, the company marketed this drug for off-label uses, including “aggression, Alzheimer’s disease, anger management, anxiety, attention deficit hyperactivity disorder, bipolar maintenance, dementia, depression, mood disorder, post-traumatic stress disorder, and sleeplessness.” The company marketed the product to doctors who did not typically treat disorders like schizophrenia and bipolar disorders.
In 2015, AstraZeneca paid $9.2 million for a kickback scheme in which the company provided price concessions to a pharmacy benefit manager for the company’s other drugs to obtain a “sole and exclusive” status for its drug Nexium. Also in 2015, the company paid $54 million as part of a multi-state settlement for overcharging Medicaid. In 2018, the company paid Texas $110 million for Medicaid fraud and off-label marketing.
In 2016, alleged Security and Exchange Commission (SEC) violations cost AstraZeneca $5.5 million. The company allegedly bribed Chinese and Russian healthcare government officials to buy its drugs.
The HighWire reported in May about a landmark lawsuit against AstraZeneca for breach of contract and failure to pay the medical bills of vaccine-injured Brianne Dressen. ICAN Legal Counsel Aaron Siri appeared on The HighWire to discuss the lawsuit. Dressen appeared on the show in 2021 to tell the story of her vaccine injuries in the clinical trial and AstraZeneca’s failure to help resolve the ongoing health issues she has faced.
13% of AstraZeneca’s revenue comes from China, which has led to volatility and uncertainty with the company’s stock price. A securities class-action lawsuit has been filed in California alleging “AstraZeneca made false and misleading statements and omitted material information regarding the company’s exposure to legal and regulatory risks in China.”