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San Diego Pharmacy To Pay $11.4 Million Settlement For Kickback Scheme

Victory Pharma Inc.'s offices on El Camino Real in San Diego.
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Victory Pharma Inc.'s offices on El Camino Real in San Diego.

A San Diego-based pharmaceutical company agreed to pay $11.4 million to resolve allegations that it engaged in a scheme to promote its drugs by paying kickbacks to doctors to induce them to write prescriptions of its products, the Justice Department announced today.

Victory Pharma Inc. agreed to the multimillion-dollar settlement to resolve federal civil and criminal liability arising from its marketing of the pharmaceutical products Naprelan, Xodol, Fexmid and Dolgic, according to authorities.

Victory entered into a deferred prosecution agreement, paying a criminal forfeiture of $1.4 million to resolve federal Anti-Kickback Statute allegations and $9.9 million to resolve False Claim Act allegations.


"Kickback schemes undermine the integrity of medical decisions, subvert the health marketplace and waste taxpayer dollars,'' said Stuart Delery, Principal Deputy Assistant Attorney General for the Civil Division of the Justice Department. "We will continue to hold accountable those who refuse to play by the rules and provide illegal incentives to influence the decision making of health care providers.''

The kickbacks to doctors included tickets to professional and collegiate sporting events; tickets to concerts and plays; spa outings; golf and ski outings; dinners at expensive restaurants; and numerous other out-of-office events, authorities said.

Victory also encouraged its sales representatives to schedule paid "preceptorships,'' which involved sales representatives "shadowing'' doctors in their offices. The settlement resolves allegations that Victory improperly used the preceptorships to induce doctors to prescribe Victory's products.

"This resolution underscores the need for physicians to make treatment decisions based on their own independent medical judgment, without being influenced by kickbacks and other improper benefits,'' said Laura Duffy, U.S. Attorney for the Southern District of California.