Former pharma exec headed to trial on kickback allegations

Between 2009 and 2012, W. Carl Reichel allegedly orchestrated a campaign to give doctors money, free meals, and phony speaking fees in exchange for prescribing medicines sold by Warner-Chilcott, where he had been the president of the pharmaceutical division, according to federal prosecutors.

Next week, he goes on trial in what is expected to be a closely watched case in the pharmaceutical industry. That’s because the case marks one of the relatively few instances in which federal prosecutors have sought to hold a high-ranking executive from a drug maker accountable for such activities.

“To the extent the executive is convicted, it will impact the industry,” said Anne Walsh, a former associate chief counsel at the US Food and Drug Administration who is now a director at Hyman, Phelps & McNamara, a law firm that specializes in regulatory matters.

To be sure, other drug company executives have faced penalties for illegal activities. Notably, three former executives at Purdue Pharma pleaded guilty in 2007 to misleading the public about the risk of addiction posed by the OxyContin painkiller. They were also banned from any dealings with federal health care programs, notably, Medicare and Medicaid.

But such instances are relatively rare in the pharmaceutical industry, even as a parade of drug makers has paid large fines for civil and criminal violations. Moreover, the Reichel trial gets under way just eight months after the US Department of Justice issued a memo that serves as a blueprint for pursuing individuals who engage in corporate malfeasance.

There is now a “more uniform, systematic, and sustained focus on individuals,” said Sally Yates, a US Deputy Attorney General at a New York City Bar Association meeting last week. She originally issued the DOJ memo.

“There is one system of justice — one in which wrongdoers can and must be held accountable based on facts and evidence, not on position or title, power or wealth,” she said.

The emphasis on individuals also emerges after a drop-off in the number of settlements that the Justice Department has reached with drug makers for illegal activities, such as paying kickbacks to physicians or illegally marketing medicines. From a high of 18 deals in 2013, which capped a rising trend, the number of settlements fell to 11 last year, according to data compiled by Public Citizen.

In the Reichel case, the feds allege that he developed and oversaw an illegal strategy to boost prescriptions for several drugs, including the Actonel osteoporosis treatment and the Doryx acne medicine. Among the charges: Reichel provided sales reps with unlimited expense accounts in order to wine and dine doctors, and he suggested targeting doctors who were already frequent prescribers, according to the indictment.

He faces no more than five years in prison, three years of supervised release, and a fine of $250,000. We asked his attorney for comment and will update you accordingly.

“I think the Justice Department needs and wants to send a signal,” said Patrick Burns of Taxpayers Against Fraud, a nonprofit that that advocates for tough penalties and is partially funded by attorneys. ”I hope this will become a larger effort to bring personal accountability to corporate suites, because if they bring pain to the executive, it will bring change to the corporation.”

At the time that Reichel was indicated last fall, Allergan, which now owns Warner-Chilcott, agreed to plead guilty to health care fraud and pay $125 million to resolve criminal and civil charges in connection with illegally promoting several drugs, according to the settlement.

Three former sales managers — Timothy Garcia, Landon Eckles, and Jeff Podolsky — also pleaded guilty for directing sales reps to access confidential patient data after insurers denied coverage for the drugs. The company sought the patient data in order to submit what are called prior authorization forms, which refer to specific requests made by doctors to insurers to provide coverage for a medicine.

They each face no more than 10 years in prison, three years of supervised release, and a fine of $250,000. Their respective sentencings will not occur until between July and September.