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FDA News

FOR IMMEDIATE RELEASE
P03-47
June 20, 2003

Media Inquiries: 301-827-6242
Consumer Inquiries: 888-INFO-FDA

Federal Investigation Leads to Guilty Plea in Healthcare Crime

Food and Drug Administration Office of Criminal Investigations (FDA OCI) officials today joined representatives of the United States Attorney's Office for the District of Delaware, the Department of Health and Human Services (DHHS), and the Defense Criminal Investigative Service (DCIS) in announcing that AstraZeneca Pharmaceuticals LP has pleaded guilty to a large-scale healthcare crime and agreed to pay $355 million to resolve the associated criminal charges and civil liabilities.

The massive conspiracy, uncovered by FDA, OCI, DHHS, and DCIS investigators, involved illegitimate pricing and marketing of Zoladex, an AstraZeneca drug for the treatment of prostate cancer. The various schemes used by the firm caused multimillion dollar losses to federally and state- funded insurance programs and individual patients.

"FDA will not tolerate criminal conduct that exploits patients, plunders the national treasury, and adds to the cost of health care," said FDA Commissioner Mark B. McClellan, M.D., Ph.D. "Today's announcement sends a strong message that the FDA will enforce the laws, and take vigorous actions against those who defraud consumers and abuse the health care system."

The agreement announced today included the following main provisions:

AstraZeneca pleaded guilty to criminal conspiracy to violate the Prescription Drug Marketing Act by causing Medicare, Medicaid and other federal providers to be overcharged for Zoladex that had been provided as free samples to urologists. As part of the plea agreement, the company agreed to pay a $63,872,156 criminal fine.
AstraZeneca also agreed to settle its civil liabilities and to resolve allegations that its fraudulent drug pricing schemes and sales and marketing misconduct had caused false and fraudulent claims to be filed with federal and state health care programs.
The agreed payments are $266,127,844 to the U.S. government for claims filed with the Medicare, TriCare, Department of Defense and Railroad Retirement Board Medicare programs, and a total of $24,900,000 to the U.S. and state governments for claims involving state Medicaid programs.

The FDA Office of Criminal Investigations began investigation of AstraZeneca pricing and marketing practices after a private individual filed a civil False Claims Act suit. The broadly-based investigation, which involved also the Office of the Inspector General for the DHHS, the DCIS and the Federal Bureau of Investigation, discovered that AstraZeneca employees were using several illegal methods to stimulate the demand for Zoladex by enabling prescribers to reap illicit profits.

In one of these schemes, AstraZeneca provided thousands of free samples of Zoladex to physicians knowing that they would charge their patients and insurance programs for the samples. Another illegal inducement used by the firm involved inflating the price of Zoladex reported to Medicare as the basis for reimbursement, while deeply discounting the actual price charged to the physicians. AstraZeneca also misreported and underpaid the Medicaid rebates it owed to the states for the use of Zoladex.

The investigation, which is continuing, also resulted in charges against three physicians of conspiring with AstraZeneca to bill patients and third party payers for free Zoladex samples. Two of the prescribers have pleaded guilty.

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