Teva Pharma pays $28 million to settle Uncle Sam for kickbacks to psychiatrist

Pharmaceutical manufacturer Teva Pharmaceutical and a subsidiary have agreed to pay  $28 million to settle claims that they paid a Chicago psychiatrist to prescribe an anti-psychotic medication to thousands of patients insured by the government. The agreement settles claims that North Wales, Penn.-based Teva and Weston, Fla.- based IVAX LLC — both subsidiaries of Israel-based Teva Pharmaceutical Industries Ltd. — violated the federal False Claims Act by making payments to Dr. Michael Reinstein, who apparently became the largest prescriber of generic clozapine in the country. 

The settlement is not an admission of liability by Teva or IVAX, nor a concession by federal and state officials that the claims “were not well-founded,” the statement said. The subsidiaries’ parent company is one of the largest makers of generic drugs worldwide, with $20.3 billion in net revenue in 2013, according to a financial statement.

The U.S. filed suit against Dr. Reinstein in November 2012. Prosecutors alleged that since at least 2003, he schemed to switch his patients to generic clozapine if IVAX agreed to pay him $50,000 under a one-year consulting agreement, amid other benefits, in violation of federal law, the statement said. The payments and other benefits from IVAX, and later Teva, included an annual renewal of the consulting agreement, as well as travel, meals and tickets to sporting events through at least 2009, the statement said. The deal allegedly led to the submission of thousands of false claims to Medicare and Medicaid.