The U.S. Justice Department continues its crackdown on white collar crime. In the latest case, a federal grand jury in Massachusetts indicted Carl Reichel, the president of Warner Chilcott’s pharmaceuticals division between 2009 and 2011, on one count of conspiracy to violate an anti-kickback statute on Thursday. Allergan (formerly Actavis) acquired Warner Chilcott in 2013.
In a separate but related announcement, Warner Chilcott also agreed to plead guilty to a criminal charge of health-care fraud relating to some Warner Chilcott sales and marketing practices before the 2013 acquisition. Warner Chilcott will also pay $125 million to resolve criminal and civil liability stemming from its promotional practices for the osteoporosis drug Actonel and other drugs.
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In a statement, Allergan noted it has cooperated fully with the federal investigation, and has already recorded charges to cover the $125 million settlement amount.
More on arrest and indictment of Ex-Allergan exec Carl Reichel
The indictment unveiled Thursday alleges that Reichel, of Chester, N.J., told the Warner Chilcott sales force he supervised to provide free meals and “speaker fees” to doctors to encourage prescribing Warner Chilcott drugs, especially Atelvia for osteoporosis.
Of note, 57-year-old Reichel pleaded not guilty to the charge in federal court in Boston on Thursday and was eventually released on his own recognizance.
Joseph Savage, an attorney for Reichel, emphasized that the charges are complete nonsense. “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,” Savage noted in an email to the media.
Legal analysts note that although the conspiracy charge carries a maximum sentence of five years in prison if convicted, sentences for first time offenders are very often less than the maximum.
Analysts also point out that several pharma companies including GlaxoSmithKline PLC and Johnson & Johnson have agreed to large settlements to end investigations of their marketing practices and other misconduct over the last few years, but only a couple of individual execs have faced criminal charges like Reichel.