Osteoporosis Drug Sale Manager Guilty of Fraud

Apparently no healthcare crime is too small to pursue for U.S. Attorney Carmen Ortiz of Massachusetts.

A recent guilty plea by a former bisphosphonate drug sales manager is exhibit one.

In 2010, Jeffrey Podolsky of New York, a former Warner Chilcott Sales U.S., LLC district manager, hatched a scheme to defraud payers to pay for his company’s non-generic bisphosphonate drugs, Actonel and Atelvia. The drugs are used for the prevention and treatment of osteoporosis.

Clinical Justification Fraud

From 2010 through 2011, Podolsky directed his sales reps to fill out prior authorizations for physicians using false clinical justifications as to why Actonel and Atelvia were necessary for their patients. His reps reviewed patients’ medical charts in violation of HIPAA (Health Insurance Portability and Accountability Act) and utilized a website to submit prior authorizations to payers that allowed them to disguise their identities as drug reps.

The sales reps needed to cook the clinical books because most bisphosphonates on the market have very little clinical difference between them. Because the drugs had become generic (risedronate), many payers had removed the drugs from their pharmaceutical formularies and moved to generics. The only way to get a prescription for Actonel or Atelvia paid for by an insurance company required a prescribing physician to explain to the payer why the non-formulary drug was medically necessary over generic versions of the drug.

$200, 000 Fraud

Podolsky’s scheme worked well enough that payers and Medicare paid at least $200, 000 for Actonel and Atelvia prescriptions that were not medically necessary and would not have been paid but for the false information submitted by the Warner Chilcott sales reps.

On July 7, 2015, Podolsky pled guilty to conspiracy to commit health care fraud. Ortiz announced the guilty plea without comment about any physicians that may have been involved in the scheme, company culpability or how the fraud came to attention of the Justice Department.

Potential Company Investigation Resolution

According to a May 14, 2015 Reuters story, the company said in a regulatory filing that it held talks with the Justice Department to discuss a potential resolution of an investigation into the company’s sales activities. The company and several employees received subpoenas in 2012 from Ortiz’s office.

“The subpoenas, ” according to Reuters, “demanded information about sales and marketing activities, payments to people who are in a position to recommend drugs, medical education and employee training, including physician remuneration.”

The investigation was “related to two lawsuits filed by former Warner Chilcott sales representatives that accuse the company of promoting several of its products by making improper claims about the products and providing kickbacks to physicians.”

Prison and Fines Possible

According to the U.S. Sentencing Guidelines, Podolsky could get up to 10 years in prison, 3 years of supervised release, a fine of $250, 000 or twice the gross loss to the Medicare program or twice the gross gain to Podolsky (whichever is greater), forfeiture of any proceeds of the offense, and exclusion from the Medicare program. Actual sentences for federal crimes are typically less than the maximum penalties.