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Allergan unit to pay $125 million to settle alleged bribe scheme

Firm to pay after US claims it wooed doctors to use drugs; Mass. physician indicted

The drug reps bought the doctors lunches, dinners, drinks. They paid for speeches the doctors never made. And in exchange, the doctors prescribed drugs that boosted their sales.

Warner Chilcott, a unit of pharmaceutical giant Allergan PLC, will pay $125 million to settle these and other charges in an agreement announced Thursday by US Attorney Carmen M. Ortiz in Boston.

Ortiz said the company ran an elaborate scheme to prod doctors — including in Massachusetts — to prescribe its drugs in exchange for kickbacks.

Warner Chilcott’s former president, W. Carl Reichel, was charged in federal court for allegedly conspiring to pay kickbacks to physicians, and a Massachusetts physician, Dr. Rita Luthra of Longmeadow, was indicted for allegedly accepting payments.


Warner Chilcott illegally promoted at least seven drugs, including the osteoporosis treatments Actonel and Atelvia.

Court documents show that Warner Chilcott representatives promoted their drugs by wining and dining physicians and giving them money and gifts for participating in medical education events. These events often were held at “upscale restaurants” and contained “minimal or no educational component.”

The company made fraudulent requests to the federal government and to insurance companies to boost sales of their drugs, the US attorney’s office said, and employees also made unsubstantiated claims about the drugs’ benefits.

“Doctors’ medical judgment should be based on what is best for the patient, and not clouded by expensive meals and other pharmaceutical company kickbacks,” Ortiz said in a statement.

Warner Chilcott has agreed to plead guilty to health care fraud. It will pay a $23 million criminal fine and $102 million to resolve false claims with state and federal governments. The case was brought by two whistle-blowers.

“Not only did the company have to pay $125 million and give up participation in federal health insurance programs, but also its executives and a physician were held criminally accountable,” said Scott Simmer, the Washington lawyer representing the whistle-blowers. “That sends a clear message that a company can’t just buy its way out of fraud and doctors also have to take this seriously.”


Brent Saunders, the chief executive of Dublin-based Allergan, said in a statement: “We take seriously our responsibility and commitment to abide by all US and international laws that govern the sales, marketing, education, and promotion of our products, and recognize the tremendous impact that this responsibility has on the customers and patients we serve.”

Allergan’s stock rose 6.30 percent on Thursday after it confirmed it was in “friendly discussions” to merge with US drug giant Pfizer Inc.

Meanwhile, Reichel, the former Warner Chilcott president, was arrested in Boston on Thursday.

Prosecutors say in their indictment that Reichel designed a sales and marketing strategy to entice doctors to prescribe his company’s drugs with free dinners and bogus speaking fees. The physicians paid to give speeches often did not speak at all, and instead enjoyed expensive dinners with sales representatives, the indictment says.

Reichel left Warner Chilcott in 2011, according to a news release. His lawyer, Joseph F. Savage Jr., of the firm Goodwin Procter LLP in Boston, called the charges false.

“For more than 30 years in the pharmaceutical industry, Carl Reichel worked hard and did the right thing, and these baseless claims can’t change that,” he said.

Three former district managers of Warner Chilcott have agreed to plead guilty to conspiracy to commit health care fraud and other violations.


Meanwhile, Luthra, 64, who works as a doctor in Springfield, is also facing charges.

The US attorney said that at least 31 times over about a year, a Warner Chilcott sales representative brought food to Luthra’s office and paid her $750 to talk for about 30 minutes while she ate. In all, Luthra accepted $23,500 from the company in exchange for prescribing its osteoporosis drugs, prosecutors say. Once the payments stopped, Luthra’s prescriptions of the drugs also declined, they allege.

Luthra is also accused of lying to federal agents about her relationship with the company, and directing one of her employees to do the same.

Her lawyer, Stephen E. Spelman of Egan, Flanagan & Cohen in Springfield, said she denies the allegations.

“She looks forward to the trial and is confident that she will be exonerated of all charges,” he said.

Luthra, a women’s health specialist, studied medicine in India but has practiced in the United States since the 1980s, now working mostly with women “at the margins of society,” Spelman added.

Globe correspondent Jack Newsham contributed to this report. Priyanka Dayal McCluskey can be reached at

. Follow her on Twitter @priyanka_dayal.