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Avanir Pharmaceuticals Will Pay $103 Million to Taxpayers to Settle Whistleblowers’ Allegations of Healthcare Fraud

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Drug Maker Improperly Paid Doctors to Boost Prescriptions of Medication Intended for Rare Disorder, Say U.S. Prosecutors

Feds Will Reward Executive Who Reported Avanir’s Scheme

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WASHINGTON, D.C. (September 26, 2019) — The maker of the drug Nuedexta will pay $103 million to settle claims that it defrauded Medicare and other government insurance programs by encouraging doctors to prescribe Nuedexta to patients who didn’t need it, according to a press release from the U.S. Department of Justice.

The drug company, Avanir Pharmaceuticals, Inc., also agreed to pay a further $12.9 million to resolve a related criminal case in which it was charged with paying kickbacks to a physician for prescribing Nuedexta, the Justice Department said.

Nuedexta is approved as a treatment for pseudobulbar affect (PBA), a rare medical condition that causes laughing or crying that is unconnected to a person’s real mood. Avanir brought PBA to popular attention with a TV advertisement featuring the actor Danny Glover. Based in Aliso Viejo, Calif., Avanir is a subsidiary of Otsuka Pharmaceutical Co., Ltd., the Japanese drug giant, itself a unit of Otsuka Holdings Co., Ltd., a public company listed on the Tokyo Stock Exchange.

The company’s practices were first reported to authorities by Kevin Manieri, a former Avanir sales director who will receive a share of the settlement proceeds. A biopharmaceuticals executive with decades of experience, Mr. Manieri was fired only months after joining Avanir in 2014. He had been quick to oppose the practices he discovered at the company, including improper payments to doctors. In early 2015, represented by The Employment Law Group® law firm and Murphy Anderson PLLC, Mr. Manieri outlined Avanir’s wrongdoing in a complaint filed against his former employer under the federal False Claims Act (FCA).

The FCA, originally signed into law by President Abraham Lincoln in 1863, makes it illegal to defraud the federal government. The law includes a “qui tam” provision that allows whistleblowers to file a complaint on behalf of the government and — if they prevail — to receive a portion of any resulting settlement or judgment.

Mr. Manieri’s lawsuit remained under seal for several years while being investigated by the Justice Department. It became public today after prosecutors agreed to its partial dismissal in the U.S. District Court for the Northern District of Ohio in exchange for Avanir’s combined nine-figure payout to the U.S. Treasury and, via a related agreement, to a number of U.S. states.

The settlement also will result in the dismissal of a second FCA lawsuit, filed after Mr. Manieri’s complaint by two sales representatives who reported similar fraud in a different part of Avanir. Those whistleblowers, too, will receive a reward under the FCA.

While Avanir has settled the fraud allegations, Mr. Manieri will continue pursuing his related claim of unlawful retaliation. Soon after he complained to an Avanir vice president about the company’s use of “speaker fees” to reward doctors for writing unnecessary prescriptions for Nuedexta, Mr. Manieri was fired on a flimsy pretext, according to the lawsuit.

“Today we celebrate Kevin for his honesty and courage in alerting prosecutors to Avanir’s actions — and for the money he has helped return to federal coffers,” said R. Scott Oswald, managing principal of The Employment Law Group (TELG), who represents Mr. Manieri. “But there’s still an injustice to be corrected here. After decades of excellence in the biopharma industry, Kevin lost his job because he spoke out at Avanir. A jury’s verdict will erase the black mark that Avanir tried to place on him.”

According to the complaint filed by Mr. Manieri, whom the drug company hired to oversee Nuedexta sales to physicians in the northern U.S., Avanir pushed its reps to focus on a few high-volume prescribers who were willing to recommend Nuedexta to patients who likely didn’t need the drug. He cited a vivid example in the complaint: A Cleveland-area neurologist who wrote twice as many Nuedexta prescriptions as any other doctor in the U.S. — and who also was Avanir’s highest-paid speaker, with 42 engagements in 12 months yielding more than $56,000 in payments.

Many of Avanir’s speaking engagements were sparse gatherings at local restaurants. The company favored speakers who were willing to promote a diagnosis of PBA “based upon a bare minimum of symptoms,” according to Mr. Manieri’s complaint. The heavy-prescribing neurologist named in Mr. Manieri’s complaint was indicted last week on criminal charges in the U.S. District Court for the Northern District of Ohio, along with another doctor and two former Avanir salespeople who arranged Nuedexta speaking engagements, “many with little to no educational value,” according to a press release issued today by the U.S. Attorney’s Office for the Northern District of Ohio.

Avanir resolved its own criminal kickback case separately today via a deferred prosecution agreement reached with the U.S. Attorney’s Office for the Northern District of Georgia, according to the Justice Department.

Avanir did not admit to wrongdoing in its civil settlements with the federal government and U.S. states, but it has agreed to pay restitution and to abide by the terms of a “Corporate Integrity Agreement” that will be enforced by the Office of the Inspector General for the U.S. Department of Health and Human Services.

Mr. Oswald represents Mr. Manieri along with Janel Quinn, TELG’s qui tam associate; both are based in Washington, D.C. They worked closely on the case with Ann Lugbill, counsel with Murphy Anderson in Cincinnati and D.C.; Assistant U.S. Attorneys Patricia M. Fitzgerald and Brendan F. Barker from the U.S. Attorney’s Office for the Northern District of Ohio in Cleveland; and Natalie Waites, senior counsel for health care fraud at the Justice Department in D.C.

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Case Information

United States ex rel. Manieri v. Avanir Pharmaceuticals, Inc.
No. 5:15-cv-611
U.S. District Court for the Northern District of Ohio, Eastern Division
Original complaint filed on March 27, 2015 (available here)

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About The Employment Law Group

The Employment Law Group® law firm represents whistleblowers and other employees who stand up to wrongdoing in the workplace. Based in Washington, D.C., the firm takes cases nationwide.

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