Pfizer to Pay $60M in Healthcare Fraud Settlement Over Biohaven Kickback Scheme

Pfizer has agreed to pay nearly $60 million to settle a lawsuit involving healthcare fraud by its subsidiary Biohaven before Pfizer acquired the company in 2022. The settlement resolves allegations from March 1, 2020 to September 30, 2022 during which Biohaven paid kickbacks to doctors for prescribing its migraine medication Nurtec ODT. The kickbacks were in the form of speaker fees and meals at high-end restaurants. In October 2022, Pfizer completed its acquisition of Biohaven and terminated the speaking program.

The original lawsuit complaint explains that the speaker program was purported to be educational in nature but didn’t provide any educational benefit to the attendees. Patricia Frattasio, a former sales rep for Biohaven, blew the whistle on the kickback program which triggered the lawsuit. The federal government, 28 states, the District of Columbia, and several insurance companies all signed on as plaintiffs in the suit.

The court documents say that Biohaven paid speakers between $1,125 and $5,000 per speech according to Frattasio. The most prominent speaker, Eric Eross, D.O., spoke 61 times in an eight-month period from March to November 2020. He allegedly earned a minimum of $70,000 for these speaking engagements. According to Frattasio, Eross was given the most speaking opportunities because he prescribed a “high volume” of Nurtec and also was willing to promote off-label usage as a preventative treatment.

The lawsuit says Biohaven began discussions with providers at New York’s Dent Neurologic Center because the center is a “key target.” Discussions with “thought leaders” started long before the FDA approved Nurtec. Biohaven reps petitioned these physicians and “thought leaders” to write to the FDA to support the drug’s approval.

Biohaven allegedly tried to cover up the payments made to the provider, another violation of federal law. According to the court documents, the pharmaceutical company only reported 10% of the payments it made to providers. Virtual “educational” programs with paid speakers reportedly occurred 17 out of 18 possible days in April 2020. They only held these programs Monday through Thursday.

The lawsuit states: “Relator [Frattasio] maintains that it is unrealistic, to say the least, to be able to drive enough attendance to host legitimate virtual programs so frequently, particularly where no new information is available. This supports Relator’s allegation that Biohaven was not concerned with quality attendance and the educational impact of the programs and that the intent of the programs was to pay their top prescribers.”

From July 20-23, 2020, Biohaven had 64 virtual programs with an average of 7.75 attendees per program, but only 2.8 of those were “target providers.” There was no purpose for the other attendees to participate in the virtual educational session because they would not be prescribing the medication. The lawsuit states that these “non-providers” were invited merely to be “seat fillers” to justify the program while offering speaker fees to doctors who write a high number of prescriptions. Attendees to the virtual events were provided free meals.

Biohaven sales reps were reprimanded if they didn’t spend a minimum of $5,000 a month on hosting these virtual “education” sessions. Frattasio said she was expected to host events and pay the speaker even if nobody signed up to attend.

“Violations of the anti-kickback statute, such as those alleged in this settlement, can unduly influence prescribers and negatively impact taxpayer-funded health care,” said Deputy Inspector General Christian J. Schrank of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “HHS-OIG will continue to collaborate with law enforcement partners to ensure that providers and corporations are held accountable if they attempt to bypass laws meant to protect the integrity of federal healthcare programs.”

Pfizer had not yet acquired Biohaven during the period where the violations took place. Pfizer has paid out settlements in the past for violating the Anti-Kickback Statute. In 2018, Pfizer paid a $23.85 million settlement for using a foundation to funnel money that covered patient co-pays for three drugs – Sutent, Inlyta, and Tikosyn.

In addition, several examples from the last six years involve pharmaceutical companies paying settlements for violating the kickback statute:

-Purdue Pharma paid $3.544 billion for false marketing and kickbacks for the opioid OxyContin. (2020)

-World Meds LLC paid $17.5 million for allegations of kickbacks to physicians and patients for the drugs Apokyn and Myobloc. (2019)

–Insys Therapeutics paid a $195 million settlement for kickbacks and unlawful marketing practices. This included education seminars with speaker fees similar to the Pfizer/Biohaven allegations. (2019)

-Teva Pharma paid a $450 million settlement for two alleged kickback schemes related to its multiple sclerosis drug Copaxone. (2024)

-Novartis paid a $678 million settlement for kickback violations and holding “tens of thousands of sham educational events” that “lavished doctors” so they would prescribe more of Novartis’ cardiovascular and diabetes drugs. (2020)

In December, The HighWire reported about AstraZeneca’s healthcare fraud scheme in China. Over a dozen employees, including executives and sales reps, were given jail sentences of up to 11.5 years.

“Through this settlement and others, the government has demonstrated its commitment to ensuring that drug companies do not use kickbacks to influence physician prescribing,” said Acting Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “The department will use every tool at its disposal to prevent pharmaceutical manufacturers from undermining the objectivity of treatment decisions by health care providers.”

A 2018 study and report by Public Citizen found that pharmaceutical industry penalties paled in comparison to the revenue generated. The report said $38.6 billion was paid in penalties from 1991 through 2017. The 11 largest global drug companies earned $711 billion in revenue between 2003 and 2012.

The study authors said they are not aware of any companies that have been barred from participating in Medicare and/or Medicaid for breaking federal laws and committing fraud. The authors wrote, “Much larger penalties and successful prosecutions of company executives that oversee systemic fraud, including jail sentences if appropriate, are necessary to deter future unlawful behavior. Otherwise, these illegal but profitable activities will continue to be part of companies’ business model.”

Pfizer paid $2.3 billion in 2009, the largest healthcare fraud settlement in history. It also paid $1.195 billion, the most significant criminal fine in the history of the United States at the time. It has since been surpassed by GlaxoSmithKline, which paid $1.5 billion in criminal penalties in 2012, and Purdue Pharma, which agreed to a $3.544 billion criminal fine. 

“Patients deserve to know that their doctor is prescribing medications based on their doctor’s medical judgment, and not as a result of financial incentives from pharmaceutical companies,” said U.S. Attorney Trini E. Ross for the Western District of New York. “This settlement reflects our commitment to hold those who violate the laws accountable, regardless of their status or prestige.”