Teva agrees $27.6 million settlement with US Justice Dept

US subsidiaries of Israeli generics giant Teva Pharmaceutical Industries (NYSE: TEVA) have agreed to pay the US government and the state of Illinois $27.6 million for allegedly violating the False Claims Act by making payments to induce prescriptions of an anti-psychotic drug for Medicare and Medicaid beneficiaries, the US Justice Department has announced.

The settlement resolves allegations that Teva and IVAX made payments to an Illinois physician, Michael Reinstein, to induce the prescription of generic clozapine, an anti-psychotic medication. Clozapine has serious potential side effects and is generally considered a drug of last resort, particularly for elderly patients. While clozapine has been approved for treatment-resistant forms of schizophrenia, it is also reported to cause numerous side effects, including a potentially deadly decrease in white blood cells, seizures, inflammation of the heart muscle and increased mortality in elderly patients.

The United States alleged that the payment scheme involving Dr Reinstein began in August 2003, when he agreed to switch his patients to generic clozapine if IVAX, which was subsequently acquired by Teva, agreed to pay Dr Reinstein $50,000 under a one-year “consulting agreement” and to provide other benefits to Dr Reinstein, in violation of the federal Medicare and Medicaid Anti-Kickback Statute.